Uranium, a nuclear metal, has seen a downside as well as an upside time to time, on account of changing trend in energy production methods and supply and demand dynamics in the last three years.
The prices started its downturn in 2015 with Uranium Futures (UXX) dropped significantly from the level of $40.15 (Day’s high on 18 March 2015) to the level of $17.75 (Day’s low on 29th November 2016).
The fall in uranium prices was accounted for the high production of uranium from major producing country Kazakhstan and change in the trend of the energy production method in the global economy. The production from Kazakhstan marked a surge to 23,607 million tonnes in 2015 as compared to just 8521 million tonnes in 2008.
The rise in uranium production and the global stance during the year 2011 to 2016, to increase the safety measure in uranium powered plants, marked a significant decline in uranium consumption.
Another significant factor which marked a decline in the consumption of the uranium in nuclear power plants was the Fukushima Daiichi nuclear disaster, which jolted many major economies over the safety issue associated with the generation of electricity through the nuclear power plant. As a result of the incident, many countries shifted towards the alternative available, i.e., crude oil and crude oil prices started marking the upticks.
Before Fukushima energy incident, the uranium powered plants held the significant piece of the energy market, but the incident led the countries to adopt safety measure sand develop technologies to contain any such incident further and exerted pressure on uranium prices.
Another factor which exerted pressure on the uranium prices apart from the less demand was the building production from major uranium producing countries such as Kazakhstan, Canada, and Australia.
However, with the increased safety measures and advanced technology, the trend of global energy production again inclined towards nuclear energy production and the uranium prices again soared in 2018. The prices in 2018 recovered sharply from the level of $20.25 (Day’s low on 17th April 2018) to the recent high of $29.80 (Day’s high on 13th December 2018).
In the recent scenario, the top uranium producer Kazakhstan announced that it would cut the production by 20% over three years, which in turn supported the uranium prices in 2018. The further production cut announcement by Canada’s Cameco Corporation to indefinitely close its McArthur and Key Lake uranium mines amid higher tariff on uranium from the U.S. President Donald Trump, is likely to help in reducing the stockpiles of uranium accumulated during the period of high production from 2008 to 2016.
On the demand front, the growing reliance on nuclear energy amid improvement in safety measures and advancement in technology could increase the demand for uranium along with an increase in space exploration activities.
As per the current state of events, the U.S. government approved the expansion of Wyoming uranium mine that will allow the Colorado-based Ur-Energy to increase the surface area of its Lost Creek Mine. The market discounted the news and uranium prices dropped from the level of $28.15 (Day’s high on 4th March 2019) to the current level of $27.25.
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