Uranium primed to extend rally on resurgent nuclear power, say analysts
20/09/2023 16:03
By Mrinalika Roy and Seher Dareen
Sept 20 (Reuters) - Uranium prices are likely to extend
a blistering rally and end the year more than 50% higher as
mounting worries over climate change accelerate a global shift
to cleaner sources of energy including nuclear power, analysts
said.
Uranium spot prices are expected to climb to $75-$80 a pound
by end-December, in a fitting finish to a year that has seen the
metal rally about 36% to-date.
At current levels of around $66.25 a pound, prices are the
highest since the 2011 Fukushima disaster. They had peaked at
$140 a pound in 2007.
"The market has been slowly building higher prices as mining
costs rise and nuclear generators look to build stocks to guard
against increasingly risky supply-side issues," said SP Angel
mining analyst John Meyer.
"We see prices rising year-on-year for next 10-20 years or
till the world finds another source for large scale
un-interruptible base load power with a low carbon footprint."
Demand from nuclear reactors was projected at 65,650 tonnes
of elemental uranium (tU) this year, with the World Nuclear
Association forecasting it to climb 28% by 2030 and nearly
double by 2040 to 130,000 tU.
A push to improve energy security, particularly after
Russia's invasion of Ukraine upended the global oil markets, has
also stoked demand, while supplies remain constrained due to
under-investment in new production, transportation risks from
geopolitical uncertainties and monopoly of state-owned entities.
Meanwhile, utilities are racing to stock up and term
contract volume so far this year exceeds 118 million pounds, the
highest in over a decade, according to market research firm and
consultancy UxC.
For 2023, UxC projects a 66 million pound deficit with 436
operable reactors globally requiring about 195 million pounds.
As a result, spot uranium and uranium miners have been among
the top-performing commodity and mining equities groups this
year, outperforming the S&P 500 Index's gains.
The Global X Uranium Exchange Traded Fund URA.P has also
jumped over 31% this year.
"There'll be an eventual easing but certainly not before
year-end... uranium should have a good run up ahead," said
Liberum mining equity analyst Ben Davis.
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Uranium Miners: YTD Returns (in %) https://tmsnrt.rs/3Pnn7TZ
Global Nuclear Power Programs https://tmsnrt.rs/3EJ33q1
Uranium Spot Prices Hit Highest Levels Since 2011 https://tmsnrt.rs/3rjqVgX
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(Reporting by Mrinalika Roy in Bengaluru; Editing by Arpan
Varghese and Sriraj Kalluvila)
((mrinalika.roy@thomsonreuters.com;))