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”.

66% off newsstand price

12 issues (and much more) for just £12

That’s right. We’ll give you 12 issues of MoneyWeek magazine, complete access to our exclusive web articles, our latest wealth building reports and videos as well as our subscriber-only email… for just £12.

That’s just £1 per week for Britain’s best-selling financial magazine.

Click here to take advantage of our offer

Britain is leaving the European Union. Donald Trump is reducing America’s role in global markets. Both will have profound consequences for you as an investor.

MoneyWeek analyses the critical issues facing British investors on a weekly basis. And, unlike other publications, we provide you with the solutions to help you turn a situation to your financial advantage.

Take up our offer today, and we’ll send you three of our most important investment reports:

All three of these reports are yours when you take up our 12 issues for £12 offer today.

MoneyWeek has been advising private British investors on what to do with their money since 2000. Our calls over that period have enabled our readers to both make and save a great deal of money – hence our position as the UK’s most-trusted investment publication.

Click here to subscribe for just £12