Uranium finds a floor

Uranium used to be a hot commodity in the mid-2000s, with the price of uranium oxide soaring to $152 a pound in 2007. It crashed during the financial crisis and then rebounded to $72 in early 2011, before slumping again. Now it is at an eight-year low of around $35, and virtually nobody pays any attention to it at all.

The commodity was hit by the disaster at Fukushima, which led to the temporary closure of all of Japan’s nuclear reactors and prompted Germany to abandon this form of energy.

The fall in demand left the market oversupplied while mine output has been increasing, led by Kazakhstan, which accounts for 38% of production, says Xan Rice in the FT.

However, the fundamentals are now improving. For one thing, the price is below the cost of production for miners, so exploration has practically ceased and production is being cut back. Demand is expanding, albeit sluggishly.

Global electricity consumption is on the rise and reactors are still being built: 557 are either under construction, planned or proposed globally, more than there were before Fukushima.

Japan’s reactors are set to come back onstream in 2016 and China remains a key source of demand. The upshot, reckons Morgan Stanley, is that uranium may have “found a floor”.

• Stay up to date with MoneyWeek: Follow us on TwitterFacebook and Google+

MoneyWeek magazine

Latest issue:

Magazine cover
Why you should worry about Greece

...and how to protect your wealth

The UK's best-selling financial magazine. Take a FREE trial today.
Claim 4 FREE Issues

From ADRs to Z scores – all the terms you wish you understood, but were too embarrassed to ask about.

Gervais Williams: if you want real dividend growth, buy small-cap stocks

Merryn Somerset Webb interviews small-cap stock expert Gervais Williams about how penny shares outperform blue chips 'again and again'.


Which investment platform is the right one for you?

When it comes to buying shares and funds, there are several investment platforms and brokers to choose from, with varying fees and charges. Find out which is best for you.


7 July 1753: The British Museum is established by Act of Parliament

On this day in 1753, Parliament passed the British Museum Act, providing for a public lottery to raise £300,000 to build a home for the nation's treasures.


Anatomy of a Grexit: how Greece would go about leaving the euro

Jonathan Loynes and Jennifer McKeown, economists at Capital Economics, look at the key issues and challenges of a Grexit, how it might be best managed, and set out a timetable for change.