So far this week, spot prices for yellowcake – uranium concentrate used in nuclear power production – have hit a new 16-year high, hitting $92.45 a pound. Reflecting on our December 2020 note to readers “Buy Uranium: Is This the Start of the Next ESG Craze?”. Yellowcake prices have increased by 217%.Thank you for reading this post, don't forget to subscribe!
Analysts at Bank of America and Berenberg Bank wrote in two separate notes that the uranium market continues to overheat, and continued tightness could push prices above $100.
BofA’s metals and mining team said tightness in uranium markets could extend through 2025, suggesting prices could move higher this year. The team of analysts has raised its uranium spot price targets to $105 per pound in 2024 and $115 in 2025.
He outlined three near-term catalysts that could push prices higher:
Higher electricity prices make higher uranium prices more absorbable
The volume of investment funds continues to increase
Inventories are lower than ever while a decline in production also remains a risk
Analysts pointed out: “The U.S.’s third bull market is set for a promising 2024.”
On a separate note, Berenberg analysts said the need to diversify away from Russian supply could be a major price driver for some uranium users. He said prices are likely to normalize around $70 a pound in the long term.
Rising prices have pushed shares of mining companies like Cameco up nearly 300% since December 2020. The Sprott Uranium Miners ETF (URNM) is also up nearly 300%. And supplier Uranium Energy Corp. is up 416%.
Demand for uranium is surging as contracts signed by utilities reached 160 million pounds last year – the highest annual volume since 2012, according to uranium market data firm UXC.
“The uranium market is only getting tighter,” UXC President Jonathan Hinz told The Wall Street Journal.
It only took 13 years after the Fukushima disaster for nuclear power to be back in the spotlight as the world races to decarbonize power grids.
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