Uranium is a radioactive metal mined in countries like Kazakhstan, Namibia, Canada, and Australia. It is mainly used for domestic nuclear power generation, to power nuclear submarines, and for nuclear weapons. In total, nuclear power plants operate in 31 countries, with France, Ukraine, Hungary, and Slovakia relying on these plants as their main source of energy. The United States is the largest nuclear electricity producer in the world. While some countries, such as Switzerland, Belgium, and Germany, are planning to phase out nuclear power, others like the United States and China intend to increase its use. Although these factors have contributed in part to fluctuations in the uranium market, there has been an unusually high surge recently in uranium prices.
After a prolonged fall of more than 70% over the past five years with major price crashes, uranium prices surged between mid-March and early-April 2020 from $24 to $29 a pound. Considering the significantly reduced demand in most industries due to the COVID-19 (Coronavirus) pandemic, this sudden spike was quite unexpected, though the underlying reasons are quite understandable. These include:
After mines around the world are reopened or return to full capacity, there may be yet another boost in the uranium market or, conversely, stockpiles of uranium may actually flood the market. From a different angle, geopolitical collaboration could help to keep prices level as industry leaders flood markets with cheap uranium to drive away competitors. It is highly likely, though, that in these times of unprecedented uncertainty, most sectors in the market, including mining, will continue to experience severe and unexpected volatility.