Uranium (UXV24) Still Has a Lot of Mid- to Long Term Upside Potential

The spot price for uranium oxide in July closed at $84.75 per lb. with longer-term contracts settling at $80.50. The uranium market has faced some short-term pressure, with spot prices falling below $80 per pound after hitting a high of $107 in February.

Prices began to rise again in 2021 and accelerated in 2023. The rebound cycle caused spot prices to reach a new milestone in January 2024, exceeding $100 per pound for the first time in 17 years. Despite the technical correction, prices are still 30% higher than last year, providing producers with strong returns.

Many commodities brokers, such as BMO, expect uranium demand to grow 2.9% annually through 2035 (CAGR), largely driven by China's push to build new reactors and the potential restart of reactors in North America. On the demand side, nuclear energy produced by 440 reactors supplies about 9% of the world's energy. Russia is building four reactors with another 14 confirmed or planned, and India has seven nuclear reactors under construction. China, meanwhile, is building 30 new reactors. In August 2024, the Chinese government invested $31 billion to build 11 new reactors at five sites over the next five years.