Achievement of a decarbonised future will require a commitment to low emission sources of electricity. Nuclear energy is a safe & reliable, fuel-based energy solution that is suitable for the generation of low emission base load power. Reactor demand for uranium is expected to either remain static or grow over the next two decades. New nuclear power plants in Asia are expected to offset lost demand from older reactor decommissions in the US and Europe.
A US$50/lb U3O8 price should provide sufficient incentive to encourage growth in supply for long term demand forecasts. Because of this, we expect the majority of new long-term contracts will be priced in the US$50-60/lb U3O8 range.
In the short term, we expect that the Sprott Physical Uranium Trust (SPUT) will continue to distort spot market supply-demand balance. SPUT’s activity is likely to induce market tightness, resulting in upward pressure on uranium spot pricing. The influence of SPUT and market speculators may lead to a uranium bubble comparable to that observed in the late 2000s.
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