Uranium surpassed $100 per pound in January, marking a significant milestone. Although he has since retired, experts agree that the long-term future of the energy commodity remains bright
.
Uranium Spot Price Volatility in Q1
The spot price of uranium showed volatility in the first quarter, rising to a high not seen since 2007 before ending the quarter below 90 dollars per pound. U3O8 values have lost 3.96 percent over the three-month period, but experts believe fundamentals remain strong and expect the sector to benefit from various favorable winds in the months
ahead.
Key Factors in the Uranium Landscape
Supply remains a key factor in the uranium landscape, with a deficit expected to grow due to production challenges. With annual production well below current demand levels, the supply deficit is expected as a long-term price driver.
“Supply-side fragility continued to be one of the key issues in Q1, especially the news from Kazakhstan that production would be significantly lower than expected in 2024 than previously thought,” Ben Finegold, an associate at London-based investment firm Ocean Wall, told the Investing News Network in an interview.
Shortage of Sulfuric Acid Hindering Supply Growth
The spot price of U3O8 started the year at 91.71 dollars and increased slightly until January 22, when it reached a 17-year high of 106.87 dollars. However, the record of almost two decades was short-lived and at the end of the month, uranium was around 100 dollars
.
Some of the price positivity at the beginning of the quarter came when Kazatomprom warned that it expected to change its production forecasts for 2024 due to “challenges related to the availability of sulfuric acid.”
COP28 Nuclear Commitment to Support Demand
The spot price of U3O8 rose again in early February, reaching $105 before another correction took effect.
As Finegold explained, part of the withdrawal was the result of short-term holders’ taking profit.
“At the end of March, short-term profit movements played a role, but as we know these movements are made on very limited volumes, so the point remains that the long-term argument remains unchanged,” he said.
Geopolitical Risk and Resource Nationalism as Price Catalysts
Uranium prices continued to consolidate from mid-February to mid-March, but remained above $84.
This long-term support is the result of a COP28 nuclear capability declaration. At the organization’s meeting in Dubai in December, more than 20 countries signed a proclamation to triple nuclear capacity by
2050.
There are currently 440 operational nuclear reactors with another 13 scheduled to start operating this year and another 47 scheduled to start generating electricity by 2030. For Finegold, this commitment to building and strengthening nuclear capacity was the most prevalent demand trend for uranium. “The demand side of the equation remains robust and growing at a time when the supply side has never been more fragile,” he commented
.
Positive Outlook on the Price of Uranium
After hitting a Q1 low of 84.84 dollars on 18 March, uranium started to move positively, ending the three-month session around 88 dollars. Commitments to nuclear capacity, energy transition and stifled supply will continue to be the main market drivers entering the second quarter and for the rest of the
year.
“We believe that uranium prices will significantly exceed the recent highs of 107 dollars from February in 2024, driven by a fundamental imbalance between supply and demand,” said Finegold. “Producers will continue to cover production deficits, while utilities struggle to fill inventory shortages.”
The Ocean Wall associate continued to note: “The intrinsic appetite of traders and financial speculators will continue to push prices higher. These demand drivers converge at a time when supply has never seemed so fragile
.”
