Uranium contract prices soaring on uncertain supply, big power demand – Reuters

Long-term uranium contract prices have hit their highest in more than 16 years on supply uncertainty and higher demand from utilities scrambling for fuel to expand their capacity to power artificial intelligence data centers, Reuters reported Monday.

Term prices are now ~$79/lb, the highest since 2008, and “with a stronger market environment, we’re currently locking in ceilings of about $125-$130/lb and floors at about $70-$75/lb in market-related contracts,” uranium miner Cameco (CCJ) said.

With a global clean energy push, nuclear generation could double by 2050 and so should supply, according to the International Energy Agency, but Plenisfer Investments thinks that outcome is unlikely, expecting the uranium market will remain in deficit over the next decade.

Plenisfer estimates prices must exceed the marginal cost of production, currently at $90-$100/lb, by at least 30% to incentivize producers to invest in new projects.

Goldman Sachs recently estimated global data center power demand, which currently accounts for 1%-2% of overall power use, will grow 160% by 2030.

Experts say rising demand for uranium from utilities is helping bridge the gap between term and spot prices, which Reuters said now trade at ~$82/lb after surging 88% last year and hitting a 14-year high in February 2024.

ETFs: (NYSEARCA:URA), (NLR), (URNM)

Uranium-related stock tickers include (CCJ), (UEC), (URG), (UUUU), (CEG), (VST), (NEE), (NXE), (DNN), (EU), (LEU), (SMR), (UROY), (OTCQX:PALAF), (OTCQX:FCUUF), (OTCPK:FOSYF)