We know that the global annual uranium supply is in a structural deficit, that can’t be solved in a year time and not at today’s low uranium price (~75USD/lb)
The uranium market is in a structural global deficit and it can’t be solved in 12 months time.
In fact, the Total amount uranium needed for short term delivery is much bigger than the Total amount uranium available for short term delivery, while uranium demand is price inelastic.
Many projects (needed to solve the global deficit) need a sustainable uranium price of ~90USD/lb (other experts talk about 100 – 120 USD/lb), and projects need years of permitting and mine construction before starting uranium production.
And because the uranium demand is price inelastic, the uranium spotprice is most likely going significantly higher in coming months.
In December 2006 the uranium spotprice was around 72 USD/lb, in February 2007 around 75USD/lb, in June 2007 139USD/lb.
But between 2007 and today there was a lot of inflation, so 75 USD/lb early 2007 isn’t the same as ~75 USD/lb today
Back in February 2007 the sector had enough with 55-60 USD/lb to have a global supply and demand in equilibrium. Yet the uranium spotprice went from 72 to 139 in 7 months time. How come?
The utilities increased their uranium spotbuying because they were a bit worried about the uranium supply in 2008-2010. And the uranium spotmarket was, and is even more today, a very tiny market.
Today with all the inflation and Labour shortage a sustainable uranium price of ~90USD/lb (other experts talk about 100 – 120 USD/lb) is needed to get global supply and demand in equilibrium again over time (It will take many years to achieve equilibrium again, because it take many years to restart and build enough new uranium mines).
And today there actually is a structural deficit, not just a worry! By consequence, the uranium spotprice is likely to significantly overshoot the needed ~90USD/lb (other experts talk about 100 – 120 USD/lb) uranium spotprice.
But what about the evolution of global nuclear fleet?
Early 2007: 435 operable reactors worldwide (total running reactors: 368,860Mwe), 28 reactors under construction and 64 reactors planned.
Today: 436 operable reactors worldwide (total running reactors: 364,586Mwe (391k -27k)), 61 reactors under construction and 112 reactors planned.
Source: World nuclear association
Those 27k Mwe are from remaining 22 Japanese reactors not restarted yet + 6 Ukrainian reactors.
Japan already restarted 11 of the 33 operable Japanese reactors and want to restart the remaining 22 reactors faster now = Unexpected additional uranium demand.
All German reactors are closed today, Germany can’t close them twice
The last 2 years many countries did a U-turn in favor of nuclear power (South Korea, France, Sweden, Belgium, The Netherlands, California, …) which resulted in unexpected licence extensions of many existing reactors and new plans to build new reactors in the future.
The licence extensions (France, Belgium, Spain, South Korea, California, …) of existing reactors have an immediat impact on the uranium demand.
And India and China are massively building new reactors! Others building reactors are Turkey, Russia, Egypt, …
China builds reactors on time and close to budget
Today China has 55 reactors running and 25 under construction,but only ~4.9Mlbs domestic uranium prod = Huge supply insecurity for China, so China is rushing to buy all uranium they can get before western utilities rush into the sector to restock and to renew their old LT contracts.
And the global uranium supply isn’t ready for this, while it already is a structural global uranium supply deficit.
This isn’t financial advice. Please do your own DD before investing.