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”.