Uranium Prices Surge to Highest Since 2007, Expected to Continue Rally Through 2023
Stock markets may be hesitating to start the new year, but there is a remarkable move taking place in one corner of the commodities market with the latest rally in uranium prices. According to a chart from Numerco, spot uranium prices climbed to just over $103 per pound on Monday, reaching a new high since 2007. Industry observers expect this rally to continue, with uranium prices projected to rise by approximately 90% in 2023 due to market supply exceeding demand, as uranium is the main fuel for nuclear power plants.
Industry experts are attributing the rally to a variety of factors. Head of commodity strategy at Saxo Bank, Ole Hansen, noted a speculative boom in the uranium market with supplies already tight due to forecasts of increased demand in the coming years. In addition, Kazakhstan’s state-owned Uranium Company, NAC Kazatomprom, stated that they were having trouble buying sulfuric acid used to extract uranium, causing production delays and leading them to lower their 2023 production targets. This alongside lowered production from Canadian uranium miner Cameco and French miner Orano has raised concerns for a supply deficit. These factors have caused analysts to project that uranium prices are expected to exceed the 2007 high of $136 per pound.
Continuous buying in the world‘s largest spot uranium fund, Sprott Physical Uranium Trust SRUUF (SPUT), and the investment vehicle Yellow Cake (UK:YCA) have further tightened the market. Yellow Cake shares rose 2.6% in London, and Australian miners like Paladin Energy (AU:PDN), Boss Energy (AU:BOE), and Deep Yellow Limited (AU:DYL) also saw significant increases in share prices on Monday, pointing towards a bullish market sentiment for the uranium sector.
Justin Huhn, founder and newsletter editor of Uranium Insider, highlighted the shortage in uranium supplies, pointing out that there is basically no secondary supply that can make up for the production gap. He noted that even though production is expected to peak by the end of the decade, there will continue to be a supply shortage, and it will be many years before any large-scale new mines are put into production.
Even in light of the potential looming ban on Russian fuel services in the U.S., market experts are bullish on uranium prices and profitability in the industry. Analysts believe that the tightening supply due to various factors will continue to push uranium prices higher.
As the uranium market continues to experience this speculative rally, investors are closely watching the developments in the industry. The surge in prices presents opportunities for investment and growth, and it is likely to have a significant impact on the energy sector in the coming years.