{"id":2969,"date":"2024-04-10T12:06:26","date_gmt":"2024-04-10T12:06:26","guid":{"rendered":"https:\/\/businesstriumphs.com\/index.php\/2024\/04\/10\/uranium-price-update-q1-2024-in-review\/"},"modified":"2024-04-10T12:06:26","modified_gmt":"2024-04-10T12:06:26","slug":"uranium-price-update-q1-2024-in-review","status":"publish","type":"post","link":"https:\/\/businesstriumphs.com\/index.php\/2024\/04\/10\/uranium-price-update-q1-2024-in-review\/","title":{"rendered":"Uranium Price Update: Q1 2024 in Review"},"content":{"rendered":"

The uranium spot price displayed volatility in Q1, rising to a high unseen since 2007 before ending the quarter below US$90 per pound. U3O8 values shed 3.96 percent over the three month period, but experts believe fundamentals remain strong and expect the sector to benefit from various<\/strong> tailwinds in the months ahead.<\/strong><\/p>\n

<\/strong>Supply remains a key factor <\/span>in the uranium landscape, with a deficit projected to grow amid production challenges. With annual output well below the current demand levels, the supply crunch is expected to be a long-term price driver.<\/p>\n

These favorable fundamentals are expected to support uranium prices for the remainder of the year.<\/p>\n

Finegold also noted that spot market activity highlights how sensitive the sector is to supply challenges.<\/p>\n

\u201cSpot market prices have also been a key talking point as volatility in pricing has increased dramatically in Q1 to both the upside and downside,\u201d he explained. \u201cIt has brought to light just how thinly traded the spot market is, but interestingly term prices have only continued to rise, which is indicative that the long-term fundamentals remain intact.\u201d<\/p>\n

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Sulfuric acid shortage impeding supply growth <\/h3>\n

The U3O8 spot price opened the year at US$91.71 and edged higher through January 22, when values hit a 17 year high of US$106.87. However, the near two decade record was short lived, and by month\u2019s end uranium was around US$100.<\/p>\n<\/div>\n

<\/small><\/p>\n

Uranium price, Q1 2024.<\/em><\/p>\n

<\/small><\/p>\n

Chart via Cameco.<\/em><\/p>\n

Some of the price positivity early in the quarter came as Kazatomprom (LSE:KAP,OTC Pink:NATKY) warned that it was expecting to adjust its 2024 production guidance due to \u201cchallenges related to the availability of sulfuric acid.\u201d<\/p>\n

The state producer and major uranium player confirmed the reduction on February 1, underscoring the importance of sulfuric acid in its in-situ recovery method and describing its efforts to secure supply.<\/p>\n

\u201cPresently, the company is actively pursuing alternative sources for sulfuric acid procurement,\u201d a press release states.<\/p>\n

\u201cLooking ahead in the medium term, the deficit is expected to alleviate as a result of the potential increase in sulphuric acid supply from local non-ferrous metals mining and smelting operations. The company also intends to enhance its in-house sulfuric acid production capacity by constructing a new plant.\u201d<\/p>\n

In 2023, Kazatomprom initiated the establishment of Taiqonyr Qyshqyl Zauyty to oversee the construction of a new sulfuric acid plant capable of producing 800,000 metric tons annually.<\/p>\n

In the years ahead, the company is aiming to bolster its sulfuric acid production capacities through existing partnerships to achieve a consolidated production volume of approximately 1.5 million metric tons.<\/p>\n

In the meantime, disruptions to Kazakh output will only grow the market deficit.<\/p>\n

According to the World Nuclear Association, total global uranium production in 2022 only satiated 74 percent of global demand, a number that is likely to shrink as nuclear reactors in Asian countries begin coming online.<\/p>\n

\u201cKazakhstan is the largest producer of uranium in the world \u2014 44 percent. We like to think of Kazakhstan as the OPEC of uranium,\u201d John Ciampaglia, CEO of Sprott Asset Management, said during a recent webinar.<\/p>\n

Kazatomprom forecasts its adjusted uranium production for 2024 will range between 21,000 and 22,500 metric tons on a 100 percent basis, and 10,900 to 11,900 metric tons on an attributable basis. While in line with the company\u2019s 2023 output, the major had to forgo a production ramp up due to the sulfuric acid shortage and development issues.<\/p>\n

Analysts and market watchers foresee the sulfuric acid shortage being a long-term price driver.<\/p>\n

\u201cThe sulfuric acid issue in Kazakhstan is a systemic problem that we do not believe will go away any time soon,\u201d said Finegold. \u201cWhile the company is doing what they can to alleviate pressures on sulfuric acid supplies, we believe their ability to ramp up production will be hindered for several years before their third domestic plant comes online. As such, we do not see Kazakh uranium production increasing significantly over the next three to four years.\u201d<\/p>\n<\/div>\n

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COP28 nuclear commitment supporting demand <\/h3>\n

The U3O8 spot price spiked again in early February, reaching US$105 before another correction set in.<\/p>\n

As Finegold explained, some of the retraction was the result of profit taking from short-term holders.<\/p>\n

\u201cFinancial speculators looking to lock in profits towards March year ends played a role, but as we know these moves are achieved on very little volume, so the point remains that the long-term thesis remains unchanged,\u201d he said.<\/p>\n

Finegold went on to highlight the different investment perspectives within the market.<\/p>\n

\u201cSpot market participants trade on very different parameters and time horizons to one another,\u201d he said. \u201cA trader and a hedge fund, for example, act in a totally different manner to a utility who are long-term thinkers.\u201d<\/p>\n

Despite February\u2019s slight contraction, uranium prices have remained elevated above US$80. <\/p>\n

Some of this long-term support is the result of a COP28 nuclear capacity declaration. At the organization\u2019s December meeting in Dubai, more than 20 countries signed a proclamation to triple nuclear capacity by 2050.<\/p>\n

There are currently 440 operational nuclear reactors with an additional 13 slated to come online this year and another 47 expected to start electricity generation by 2030. For Finegold, this commitment to building and fortifying nuclear capacity has been uranium\u2019s most prevalent demand trend. \u201cThe demand side of the equation remains robust and growing at a time when the supply side has never been more fragile,\u201d he commented.<\/p>\n

Others also believe the COP28 commitment was a tipping point for the uranium market that spawned several announcements about mine restarts and project extensions.<\/p>\n

\u201cGovernments around the world have acknowledged that they need to be more supportive, not just financially, but in terms of expediting new projects, expediting the environmental permitting processes for new uranium mines,\u201d said Sprott\u2019s Ciampaglia during the webinar. \u201cAnd it\u2019s not just happening in one country \u2014 with the exception of one or two outliers in Europe, this is happening around the globe.\u201d<\/p>\n<\/div>\n

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Geopolitical risk and resource nationalism are price catalysts <\/h3>\n

Uranium prices continued to consolidate from mid-February through mid-March, but remained above US$84. <\/p>\n

This positivity saw several uranium companies in the US, Canada and Australia announce plans to bring existing mines out of care and maintenance. In late November, uranium major Cameco (TSX:CCO,NYSE:CCJ) announced it was restarting operations at its McArthur River\/Key Lake project in Saskatchewan after four years.<\/p>\n

In January, the McClean Lake joint venture which is co-owned by Denison Mines (TSX:DML,NYSEAMERICAN:DNN) and Orano Canada, reported plans to restart its McClean Lake project, also located in the Athabasca Basin of Saskatchewan.<\/p>\n

South of the border, exploration company IsoEnergy (TSXV:ISO,OTCQX:ISENF) is gearing up to restart mining at its Tony M underground mine in Utah. \u201cWith the uranium spot price now trading around US$100 per pound, we are in the very fortunate position of owning multiple, past-producing, fully permitted uranium mines in the U.S. that we believe can be restarted quickly with relatively low capital costs,\u2019 IsoEnergy CEO and Director Phil Williams said in a February release.<\/p>\n

Building North American capacity is especially important ahead of the global nuclear energy ramp up and the ongoing geopolitical tensions between Russia and the west. While nuclear power is used to provide nearly 20 percent of America\u2019s electricity, the nation produces a very small amount of the uranium it needs.<\/p>\n

Instead, the country imports as much as 40.5 million pounds annually.<\/a><\/p>\n

According to the US Energy Information Administration, 27 percent of imports come from ally nation Canada, while 25 percent of imports come from Kazakhstan and 11 percent originate in Uzbekistan \u2014 both considered allies of Russia.<\/p>\n

Commenting on that topic, Finegold noted, \u201cThe ongoing talk around US sanctions remains the most significant geopolitical catalyst for the sector.\u2019 He added, \u2018While we do not believe sanctions could be enforced immediately, it will send a signal to the market that Russia will no longer be involved in the largest uranium market in the world and would inevitably have an impact on fuel cycle component prices.\u201d<\/p>\n

If sanctions do limit imports from Russian allies, Finegold expects these countries to form stronger ties to China.<\/p>\n

\u201cOutside of this, the relationship between Kazakhstan and China remains one to watch as the Chinese continue their nuclear rollout strategy and look to procure millions of Kazakh-produced pounds,\u201d he added.<\/p>\n<\/div>\n

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Uranium price outlook remains positive <\/h3>\n

After hitting a Q1 low of US$84.84 on March 18, uranium began to move positively, ending the three month session in the US$88 range. Commitments to nuclear capacity, the energy transition and stifled supply will continue to be the most prevalent market drivers heading into the second quarter and the rest of the year.<\/p>\n

\u201cWe believe uranium prices will significantly outrun the recent US$107 highs from February in 2024, driven by a fundamental supply\/demand imbalance,\u201d said Finegold. \u201cProducers will continue to cover production shortfalls, while utilities struggle to replenish inventory shortages.\u201d<\/p>\n

The Ocean Wall associate went on to note, \u201cThe inherent appetite of traders and financial speculators will continue to drive prices higher. These demand drivers are converging at a time when supply has never looked more fragile.\u201d<\/p>\n<\/div>\n

Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.<\/strong><\/p>\n<\/p>\n

This post appeared first on investingnews.com<\/div>\n","protected":false},"excerpt":{"rendered":"

The uranium spot price displayed volatility in Q1, rising to a high unseen since 2007 before ending the quarter below US$90 per pound. U3O8 values shed 3.96 percent over the three month period, but experts believe fundamentals remain strong and expect the sector to benefit from various tailwinds in the months ahead. Supply remains a […]<\/p>\n","protected":false},"author":0,"featured_media":2970,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-2969","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investing"],"_links":{"self":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/2969","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/comments?post=2969"}],"version-history":[{"count":0,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/2969\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media\/2970"}],"wp:attachment":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media?parent=2969"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/categories?post=2969"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/tags?post=2969"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}