57 million pounds of U3O8, or the equivalent of about 32.5% of total annual demand, global uranium production fell short of demand in 2020, with 47 million pounds of U3O8 projected for 2021. This means that the uranium sector will have a supply deficit of more than 100 million pounds of U3O8 for 2020 and 2021 alone.
And yet the uranium spot price remains at an exceedingly low level around US$30 per pound. This is mainly due to high stockpiles, which have been built up since the Fukushima disaster 10 years ago and have not yet been fully used up again. Until 2016, mines around the world kept producing record quantities, sometimes even at mining costs above the spot price. The fact that this system worked is due to the procurement methodology of the uranium market. Only small quantities are traded at the spot price, most of which are by-products of the mining of other raw materials. By far the greater part is traded via long-term contracts. Recently, many power plant operators tried to secure their supplies at the cheap spot price in the short term. However, in view of an overflowing supply deficit, they are likely to return to the negotiating table shortly and renegotiate the expiring contracts (around 75% of total demand will soon no longer be secured by contract). The first signs of this are already evident. Until then, even producers, future producers as well as ETFs are buying the spot market empty, thus increasing the pressure on the utilities.
In addition, the development of so-called "small modular reactors" is progressing rapidly. These are nuclear fission reactors that are smaller than conventional reactors, can be manufactured in a factory and then moved to an assembly site. This should create a huge surge in demand for uranium in the future, because there is no way around nuclear power as the only baseload, emission-free energy source in the coming decades if the climate targets set around the globe are to be achieved.
This report provides a wealth of information on the uranium sector and offers insightful interviews with exclusively selected experts from the industry. The presentation of a number of interesting companies suitable for speculation on rising uranium prices completes the report.
