The short-term outlook remains depressed, the uranium spot and term prices continue to fall, the level of contracting is significantly down on previous years and a number of miners face cashflow pressures as the spot price is close to or below operating costs.
However, the longer term view is that the current supply overhang will clear leaving a supply gap as China ramps up its nuclear fleet.
When forming views on the uranium market, it’s critical to stand back and consider nuclear energy’s vital role in the global energy mix. The ongoing Russia-Ukraine crisis heightens the importance of national energy security and having a diverse energy mix. The longer term sovereign hand is being played out in the number of recent country-to-country agreements promoting nuclear infrastructure and trade. The sovereign significance is also seen in the recent investment by the China National Nuclear Corporation in the Langer Heinrich mine securing supply for China.
The timing of the expected recovery hinges on signals of Japanese restarts and the pace of ramp up of the Chinese fleet. At the moment, utilities are sitting on their hands until the supply/demand equation becomes clearer. The supply/demand balance could easily change dramatically if a supply disruption event was to occur.
- Derek Meates
KPMG in Canada