Last year was a pretty good one for most commodities. But not for uranium. The fuel for nuclear power slid to a 12-year low of $18 a pound. But last week it bounced by 10% after Kazakhstan, the world's biggest producer, said it would cut output by a tenth, or 3% of total global production. It has decided that, thanks to a glut, the material is worth more in the ground for now. The move "may be the inflection point" for uranium-related assets to "head higher across the board", Rob Chang of Cantor Fitzgerald told Bloomberg.com.
A favourite among investors (including MoneyWeek) in the commodities upswing of the 2000s, uranium peaked in 2007 at $137 a pound. As with all raw materials, rising prices stimulated supply, ending an upswing that had been overdone in any case, but the market suffered a major additional setback. The accident at Japan's Fukushima nuclear plant put a major dent in demand as Japan froze plans to build new reactors and Germany decided to go non-nuclear completely. Supply built up to such an extent that late last year Japan's inventories were big enough to power the country's reactors for at least six years.
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