Uranium Report 2022
After years of bobbing around below the US$30 per pound mark, the price of uranium has shot up in recent months, hitting a temporary high of US$63.88 at the beginning of April. This will not be the end of the line, however, as the renaissance of nuclear energy, which requires uranium as fuel, has only just begun. At the latest with the decision of the European Commission in early 2022 to give nuclear energy and natural gas a "climate seal", nuclear power will also become respectable again in Europe. Both have been included in the so-called Taxonomy Regulation, which is intended to boost billions in investments in green energies. Add to that the Ukraine war, which will take a lot of natural uranium (Kazakhstan is the world's largest uranium producer) and enriched uranium (Russia enriches a good 45% of the world's production) off the market or cause some countries to stop sourcing their uranium from Russia. In addition, the beginning electrorevolution will require a large amount of additional, CO2-free energy in the future.
But it is not only on the demand side that a lot has happened in recent months. The supply of natural uranium has recently become increasingly scarce. New players emerged who either bought physical uranium as physically deposited funds or - as in the case of the largest Western producer Cameco - serviced their long-term supply contracts from the spot market. In sum, this has created an annual supply deficit of between 40 and 60 million pounds over the past 5 years. This means that in 2021, for example, around 60 million pounds less U3O8 was produced than was simultaneously demanded. Accordingly, the inventories of many energy suppliers (utilities) have been exhausted, so that they now have to come back to the negotiating table and conclude new long-term supply contracts. It can be assumed that corresponding uranium producers will set a price of around US$70 per pound of U3O8 as a lower limit. The mix of a strong supply shortage and steadily growing demand described above should be argumentation enough for this.
This of course continues to open up excellent opportunities for interested shareholders to participate in the uranium market.