Have Uranium Prices Finally Turned a Corner?

Uranium prices have started to edge higher, with the commodity advancing by $2 in December to close at $20.25 per lb. The 10% positive monthly movement was the first time in a while that the commodity ascended. So far in January, uranium is unchanged.

Uranium fell from $35 per lb. at the start of 2016 as the near-term demand for the commodity sunk. Uranium has been in the doldrums since the 2011 Fukushima nuclear disaster dented demand for the commodity. Analysts have remained long-term bulls on uranium prices, continuously expecting a recovery, but their bullish calls have repetitively been misses. Last year, as uranium fell to an all-time low analysts acknowledged that the recovery was taking longer than expected, but they maintained their stance that one day, the market for uranium would grow. December’s price movement for the commodity was positive, but at $20.25 the commodity is far of its historic high of $137 a pound.

Amid the negative price movement, the focus was countries idling and/or shuttering their nuclear facilities. Germany has permanently shut down eight of its 17 reactors and has pledged to close the rest by the end of 2022. Italy is also decommissioning all of its nuclear power plants. While that is a negative for near-term demand, over the long run nuclear expansions will more than compensate.

Sixty new nuclear plants are currently under construction and world nuclear power generation increased by 1.3% in 2016 after a 10-year decline. Nuclear power is not going away, it is simply shifting. Last year’s growth was propelled by Asia. China led the charge, increasing its nuclear generation by almost 30%, passing Korea to become the world’s fourth-largest producer of nuclear power. Going forward China will add even more nuclear plants as the country moves to reduce its dependence on coal. China plans to double nuclear capacity to at least 58 GWe by 2020-21, and up to 150 GWe by 2030.

Leia Toovey has a B.Sc. in geology from Simon Fraser University, and her degree had a focus on resource economics. Out of school, she started working in the booming mining industry of Vancouver, Canada, covering junior mining stocks and commodities including potash, copper, nickel, oil and gold. Then she moved to New York and worked as a commodities analyst covering a breadth of commodities, from the Baltic Dry Index through the softs. As a geologist she has a greater understanding of the exploration and extraction side of commodities, and how changes in technology and the depletion of resources impact pricing. At Economic Calendar she covers a variety of commodities, providing daily technical and fundamental analysis and assessing major market developments.