Uranium price jumped to their highest in nearly 15 years on Friday after Kazatomprom (LON: KAP), the world’s largest uranium producer, warned it may miss its production targets for the next two years.
Spot uranium prices have more than doubled in 2023 and are currently trading at $97.45 a pound. In 2007, uranium prices reached an all-time high of more than $140 a pound. However, global demand for nuclear power suffered following the 2011 accident at the Fukushima nuclear plant in Japan, and demand for uranium has remained low for most of the past decade.
According to Kazatomprom, a shortage of sulfuric acid and construction delays at newly developed deposits are the main factors behind the current production challenges, which the company says are likely to continue until 2025. Next year’s production guidance could also be affected if supply constraints persist into 2024 and prevent construction from proceeding smoothly as planned.
Analysts at Bank of America and Berenberg Bank both point out that the uranium market is only going to get hotter, and continued supply constraints could push uranium prices above $100.
Bank of America’s metals and mining team said tightness in the uranium market could extend into 2025, suggesting prices could continue to move higher throughout the year, with spot prices expected to rise to $105 per pound in 2024 and $115 per pound in 2025.
According to analysts, three catalysts that could boost uranium prices in the near term include higher electricity prices making higher uranium prices more acceptable, a continued increase in the size of investment funds, lower inventories than previously expected and still a downside risk to production.
