Uranium Price Forecast: Can the Yellowcake Reach Fresh Record High?

After enduring a slump for more than a decade due to decreased demand following the 2011 Fukushima reactor leak, the uranium price is finally experiencing a revival.

Years of underinvestment have depleted the supply, while the global push toward achieving net-zero emissions has reignited interest in nuclear power plants, leading more countries to either increase or incorporate nuclear power into their energy mix.

This combination has propelled the price of yellowcake to its highest level since 2007, reaching over $90 per pound in January, double the price from a year ago.

The question now arises: will the uranium price be able to reach its all-time high of nearly $140 per pound, as it did in 2007?

Let’s delve into expert insights to gain a better understanding of uranium price forecast.

Table of Contents Table of Contents

1. Key Takeaways
2. Uranium Price Forecast Summary
3. How Uranium Is Traded
4. Uranium Price 2022-2023: Supply Constraint, Energy Transition Reverse Downtrend
5. Factors Influencing Uranium Price Forecasts 2024
6. Uranium Price Forecast 2024
7. Uranium Price Forecast 2025
8. Uranium Price Forecast 2026-2029
9. The Bottom Line
10. FAQs
11. References

Show Full Guide

Table of Contents

1. Key Takeaways
2. Uranium Price Forecast Summary
3. How Uranium Is Traded
Show Full Guide
4. Uranium Price 2022-2023: Supply Constraint, Energy Transition Reverse Downtrend
5. Factors Influencing Uranium Price Forecasts 2024
6. Uranium Price Forecast 2024
7. Uranium Price Forecast 2025
8. Uranium Price Forecast 2026-2029
9. The Bottom Line
10. FAQs
11. References

Uranium Price Forecast Summary

How Uranium Is Traded

Before delving into the 2024 uranium price movements, let’s examine how the heavy metal is traded. ?

Unlike other commodities, uranium is subject to strict trading rules. This heavy metal is only sold to countries that have signed the Nuclear Non-Proliferation Treaty (NPT), which ensures its use for peaceful purposes and prevents the spread of nuclear weapons.

NPT signatories must also permit regular inspections by the International Atomic Energy Agency (IAEA). According to the IAEA, 191 state parties have adhered to the treaty since it opened for signatures in 1968.

Additionally, a handful of private companies, such as UxC LLC and Trade Tech, develop global uranium pricing indexes. UxC also partners with the New York Mercantile Exchange (NYMEX) to offer uranium futures contract, which was launched in April 2007.

Government policies strongly influence uranium trading, as state-owned enterprises dominate the market. According to Canadian miner Cameco, which operates the world’s largest uranium mine, Cigar Lake, state-owned enterprises produce about 80% of primary uranium.

Uranium Price 2022-2023: Supply Constraint, Energy Transition Reverse Downtrend

According to data from the International Monetary Fund (IMF) retrieved from the U.S. Federal Reserve Bank of St. Louis (FRED), the global uranium price had gradually dropped to about $40 per pound in April 2010 from an all-time high of above $136 per pound (lb) in June 2007. It rebounded to $65/lb in February 2011, a month before the Fukushima Daiichi Nuclear Power Plant meltdown following a major earthquake and subsequent damaging tsunami in Japan.

The Fukushima Daiichi accident raised concerns about the safety of operating nuclear power plants. The International Atomic Energy Agency (IAEA) estimated that approximately 48 gigawatt electrical (GWe) of nuclear capacity was lost globally between 2011 and 2020 as some governments shut down existing nuclear reactors or shelved plans for new ones.

The uranium price remained in a slump for the next decade, dropping to below $20 in late 2016 before starting to show a reversal in the downtrend in mid-2021. In the summer of that year, a major purchase of excess supply by Toronto-based investment fund Sprott Asset Management LP and political instability in Kazakhstan, the world’s largest producer, fueled a uranium price rally to above $40/lb, doubling from the lows in 2016 to 2017, according to S&P Global.

Uranium prices continued to rally all the way to the middle of 2022 due to depleting mine supply as years of low prices forced miners to shut down operations. According to a joint report by the Organisation for Economic Co-operation and Development (OECD) and Nuclear Energy Agency (NEA), global uranium output fell by 12% from 53,501 tonnes of elemental uranium (tU) in 2018 to 47,342 tU in 2020. By January 2021, uranium production covered 79% of world reactor consumption, down from 86% in 2019.

Russia’s invasion of Ukraine in late February further heightened concerns about uranium supply, subsequently boosting uranium prices. Despite ranking only sixth in global uranium production, Russia holds a significant share of global enrichment capacity, amounting to 39%, according to Cameco. Enrichment is a crucial step in preparing nuclear fuel for use in reactors.

Grant Isaac, Cameco’s Executive Vice-President and Chief Financial Officer, stated during the RBC Capital Markets Investor Webcast on March 14, 2024, that the uranium price rally was primarily attributed to a supply deficit rather than the ban on Russian commodities.

“Russia’s invasion of Ukraine and prior to that, the annexation of Crimea, this was not a catalyst. This was an accelerant, fundamental change that was already happening in the market. Our market was moving into a structural deficit because prices had been so low. Prices got so low, it began to destroy its own supply for uranium that was going to happen regardless of what Russia did.”

The price rally paused in the second quarter of 2022, but a shortage of supply kept uranium prices elevated above $40 until the third quarter of 2023. Starting from September 2023, uranium prices rallied to above $50/lb as constrained global supply persisted, and geopolitical tensions continued to fuel concerns about supply.

By the end of 2023, the uranium price closed at $90/lb level, gaining nearly 87% over the year.

Factors Influencing Uranium Price Forecasts 2024

Uranium futures price went full steam ahead from the beginning of 2024, opening at $92/lb in early January and surging to $106/lb on 22 January, the highest price in 16 years. At the time of writing, uranium futures price has gained 71% in the past 12 months, trading at $87.40/lb.

Uranium spot and long-term prices have also gained. According to uranium price information provided by UxC and TradeTech, uranium spot price reached $90.38/lb in May 2024, falling from $100.25/lb in January, but it was more than double that in 2020 to 2023. The long-term uranium price averaged $78.5/lb in May 2024, up from $72/lb in January.

Let’s take a look at factors that will shape the uranium price forecast for the remainder of 2024 and beyond.

Supply-Demand Imbalance to Persist

An imbalance in the uranium market is expected to persist for the long term, as supply is struggling to keep pace with growing demand following years of underinvestment. Low prices forced miners to close existing capacities and delay opening new ones, which resulted in a sharp drop in the global uranium mining output to 47,731tU in 2020 from 59,331tU in 2013, according to the World Nuclear Association (WNA).

Production of U3O8 also declined to 56,287 tonnes in 2020 from 69,966 in 2013. By 2020, output only met 74% of global demand, down from 91% in 2013 and 98% in 2015. The uranium output rebounded to 47,808tU in 2021 and 49,355tU in 2022. Despite a recovery in output, only 74% of global uranium consumption was met in 2022.

However, the rebound in uranium price may incentivize miners to restart their production and open new mines. It was estimated that as of 1 January 2021, the annual production capacity of idled mines amounted to over 29,400 tU, which can be brought back quickly providing the market signals were appropriate, according to the NEA-OECD report.

Tom Bailey, Head of Research at London-based HANetf, an issuer of the Sprott Uranium Miners UCITS ETF (URNM), told Techopedia:

“Investment in uranium mining was scarce in the 2010s following the post-Fukushima price slump. On the back of this tight supply we have already seen strong price increases – but as the old adage goes, the solution for high prices is higher prices, as an incentive for more investment to increase output.”

However, bringing back production from closed mines or starting new ones will be a painstakingly slow process. It depends on such as exploration work, getting regulatory clearances, building infrastructure, and market conditions.

Australia’s Office of Chief Economist (OCE) projected global uranium production to reach 70.1kt in 2024, up 8.85% from 64.4kt in 2023, but it will still be below consumption estimated at 95.4kt this year. By 2029, uranium production is projected to reach 87.6kt, lagging behind estimated consumption of 94.6kt.

In its latest Global Scenarios for Demand and Supply Availability 2023-2040 report, the World Nuclear Association projected world reactor requirements to increase to 83,840 tU by 2030 and almost 130,000 tU by 2040, from 65,650 tU per year. On the other hand, WNA projected output for existing mines to remain fairly stable until 2030 before decreasing further over the decade to 2040.

Global Energy Transition Policy to Support Expansion

The push to achieve net-zero emissions has sparked renewed interest in nuclear energy. During the UN climate talks in December 2023, 22 countries, including the U.S., France, and Canada, pledged to triple their nuclear energy capacity by 2050 from the 2020 level.

HANeft’s Bailey said:

“For decades, nuclear energy has been out of favor in much of the world. However, there is now a growing realization that nuclear energy is vital for providing secure low-carbon energy. Nuclear energy emits almost no carbon, much like renewables. However, unlike renewables, it does not suffer from intermittency.”

Apart from the pledge to triple nuclear capacity, Bailey said the higher prices also see utilities extending the lifecycle of existing nuclear power plants and the potential for the reopening of previously closed nuclear power plants in the U.S., such as Palisades Power Plant.

Globally, China continues to build up its nuclear energy massively, potentially to overtake the U.S. as the world’s largest fleet of nuclear reactors, Bailey added. According to the U.S. Energy Information Administration (EIA) data, the U.S. has 94 reactors.

In its report on May 6, EIA stated that China has added more than 34 gigawatts (GW) of nuclear power capacity in the past decade, bringing the country’s number of operating nuclear reactors to 55 with a total net generating capacity of 53.2 GW as of April 2024. An additional 23 reactors are under construction in China.

“It took the U.S. nearly 40 years to add the same nuclear power capacity as China added in 10 years,” the agency said in the report. ?

Data from WNA shows that there are 440 operable reactors globally, generating 396,269 Megawatt electrical (MWe) or 396.26 Gigawatt electrical (GWe). The organization projected the nuclear capacity to reach 444 GWe by 2030 and 686 GWe by 2040.

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U.S. Ban on Russian Supply

On May 14, U.S. President Joe Biden signed into law the Prohibiting Russian Uranium Imports Act, which bans imports of unirradiated low-enriched uranium (LEU), the key ingredient to make nuclear fuel produced in the Russian Federation or by a Russian entity.

The U.S. government said the move aimed to end reliance on Russia, which supplies 35% of the country’s nuclear fuel imports, while admitting it won’t happen overnight.

The U.S. Department of Energy said in a statement on May 14:

“We’re restarting old reactors, building new ones, and working to deploy advanced reactors to help us meet our clean energy goals. All of those will need fuel, and we can no longer rely on bad actors like Russia to supply it.”

While the ban was long anticipated as the next step to sanction Russia for its invasion of Ukraine, it resulted in an uptick in uranium prices. Particularly given Russia’s considerable part of the enriching capacity.

“The end result is tighter supply in an already tight market,” said Bailey.

David Talbot, managing director and head of equity research at Toronto-based global mining investment bank Red Cloud, envisaged that it would be challenging for the U.S. to replace Russian supply and, more importantly, the enrichment services.

Talbot said in a podcast on May 7:

“Ultimately, we believe Russian and likely Kazakh fuel could stay in Russia, China, and perhaps India as it ramps up over the next couple of decades, and this is likely to drive prices higher. The U.S. nuclear utilities will likely get support from friendly uranium-producing jurisdictions such as Canada, Australia, Niger, although that final country has some issues of its own, and prices are going to rise up.”

However, Talbot saw that the ban may provide an incentive for U.S. producers to start producing uranium in the country.

AI to Drive Demand for Nuclear Power

Another factor that may affect the uranium price forecast is the widening use of artificial intelligence (AI), which is likely to drive up further electricity demand for data centers.

The International Energy Agency, in its 2024 electricity report, estimated that data centers, cryptocurrencies, and artificial intelligence consume almost 2% of total global electricity demand. A data center’s electricity demand comes from computing (about 40%), cooling requirements to achieve stable processing efficiency (about 40%), and 20% from other associated IT equipment.

Goldman Sachs, in a note on May 14, estimated data center power consumption from AI to reach 200 terawatt-hours per year between 2023 and 2030. By 2028, it expected AI to represent about 19% of data center power demand.

Bailey of HANeft said:

“Nuclear energy will potentially play a key role in supplying the electricity required for the AI revolution. Nuclear energy emits almost no carbon when producing electricity. To meet these growing electricity demands, without derailing the world’s various net-zero targets, nuclear energy is essential. Technology firms are already noting this.”

Bailey took examples of several transactions involving tech giants Microsoft and Amazon, demonstrating their use of nuclear power to meet their data center electricity needs.

In June 2023, Microsoft signed a deal with Constellation Energy to buy nuclear power to cover 35% of the energy needs for one of its data centers in Boydton, Virginia.

On March 4, 2024, Talen Energy (TLNE) announced it had sold its 960MW Cumulus data center campus in northeast Pennsylvania to Amazon Web Services for $650 million. Under the agreement, Talen will supply power to the campus from its Susquehanna Steam Electric Station, the sixth-largest nuclear power plant in the U.S.

Uranium Price Forecast 2024

Australia’s Office of Chief Economist (OCE) expects the uranium price to trade at $98.6/lb for the overall year of 2024, surging 54% from $63.9/lb in 2023 as more new nuclear capacity comes online. While the high uranium price is likely to incentivize miners to maximize capacity, it is not likely to pose downside risks to prices.

OCE said:

“High prices are not expected to significantly affect the cost or use of nuclear power, and instead will likely motivate substantial efforts on the supply side. Higher prices will incentivize governments and private holders of uranium to sell off stockpiles, which remain substantial.”

Data provider Trading Economic’s uranium price forecast for 2024 saw the yellowcake rise over the year, from $91.07/lb in the second quarter to $93.45/lb in the final quarter of 2024.

Uranium Price Forecast 2025

For the uranium price forecast for 2025, OCE and Trading Economics projected uranium to continue its uptrend. OCE estimated uranium to trade at an average of $105.2/lb, while Trading Economics expected the price to reach $94.66/lb in the first quarter of 2025. The firm did not offer a forecast for overall 2025.

While HANeft did not make a specific price forecast, the company has an upbeat outlook on its uranium price predictions.

Bailey said:

“I will say that whilst we have seen a very strong run for the spot price of uranium (U3O8), which reached above $100/lb at the start of this year, it is important to note that we are not near the all-time high seen in the 2000s, which was near $140/lb. With a 1.5 B lb shortfall to 2040 via world uranium reactor requirements less primary mine supply, there is still potential room to run in this bull market.”

Uranium Price Forecast 2026-2029

Over a longer period from 2026 to 2029, OCE’s uranium price predictions show the metal is set to continue its upward trajectory. It expected uranium price to reach $120.6/lb by 2029, from $108.9/lb in 2026.

OCE said:

“Over the longer term, prices are likely to encourage more development of new mine capacity, though, this is not likely to have a significant effect on supply until after the outlook period. With a primary market shortfall expected to persist, prices are projected to remain high throughout the outlook period, with stockpiles and existing mine capacity coming under growing pressure.”

While not providing a uranium price forecast for 2030, the pledge by over 30 countries to triple nuclear power capacity by 2050 shows growing support for the nuclear industry, said Cameco in its financial report.

Cameco said:

“Nations are reaffirming their commitment to existing nuclear and/or reversing policies to phase out nuclear, non-nuclear countries are emerging as candidates for new nuclear capacity, improvements are being made in global sustainable financing policies to include nuclear energy, and opinion polls showing growing public support.

“With a number of reactors being saved from early retirement, life extensions to existing reactors being sought, construction projects approved and many more planned, demand for uranium fuel continues to improve in the near, medium and long term.”

The Bottom Line

The uranium price forecasts presented in this article are optimistic, indicating that the yellowcake will likely continue its upward trend as the uranium market is expected to experience a deficit in the long term.

Despite the anticipated robust growth in demand, uranium will face challenges in restoring output lost due to more than a decade of underinvestment.

FAQs