Our METALS 100 segment last March interviewed Mr. William Sheriff, Executive Chairman of enCoreEnergy Corp. (NYSE American: EU, TSXV: EU), a diversified U.S. uranium development company, in which William made the case for an impending bull market in uranium prices.
William’s bullishness on uranium is shared by Warren Irwin.Warren was interviewed in our METALS 100 segment last May, and is the chief investment officer of Rosseau Asset Management Ltd., a Toronto-based hedge fund that specializes in investing in natural resources. He focused on the new bull market in uranium, which has doubled from $53 then to $106 now, setting a new high since May 2007. Share price of enCoreEnergy has more than doubled over the same period.
On January 12, Kazakhstan’s National Atomic Energy Company, the world’s largest producer of natural uranium, said in an announcement on its official website that it may lower its production guidance for 2024-2025 due to shortfalls in the supply of key operating materials and delays in construction work at newly developed deposits in 2024. This has certainly filled in the fire for the hot uranium price.
At present, many countries have introduced favorable policies to promote the development of nuclear power as a clean energy, nuclear power plant approvals and construction into the fast lane, but uranium resources exploration expenditure is low, geopolitical risks continue to disturb the uranium supply with multiple uncertainties. Driven by demand exceeding supply, uranium prices may have room to rise in the future.
In contrast to the hot uranium market is the cold iron ore market. Iron ore demand is expected to be low due to the economic downturn in China, the world’s largest importer of iron ore. The continued macroeconomic downturn in China and uncertainty about demand for construction materials in the year ahead dampened steel mills’ demand for iron ore and offset increased buying activity by mills during the usual restocking season. The price of 63.5% iron ore for delivery in Tianjin in January fell to below $130 a ton, the lowest in two months.
However, Rio Tinto announced its fourth quarter results on January 16th. The report states that the Chinese economy showed signs of stabilization in the fourth quarter of last year. Rio Tinto expects China’s economy to rebound slowly but steadily, with the recovery window more likely to occur in the second half of 2024.
Rio Tinto also predicts that in the medium to long term outlook, iron ore consumption will soon peak in China, home to the world’s largest steel industry. However, driven by urbanization in Asian countries such as India, global demand for iron ore is still expected to grow by nearly 25% by 2050.
