No commodity faces the unique pressure that uranium and nuclear fuel do and there is little prospect of a near-term recovery
There is too much of nearly every commodity in the world today. Then there is uranium. The outlook for the element that powers nuclear reactors may be worse than for any other, and there is almost no prospect for improvement soon. Unlike other commodities, low prices won’t stimulate demand.
There are several reasons for the weakness, some obvious, others surprising. The result has been the price of triuranium octoxide, which surged 1,400% in the five years through June 2007 to $136 a pound, is now about $25. And the price of fuel processing has dropped by nearly two-thirds since 2010.
The obvious reasons are the shutdown of nuclear power plants after the 2011 nuclear accident at Fukushima, Japan. Plants also shut down in Germany, Sweden, and elsewhere, while Belgium and Taiwan may be next. Even China, the leading growth market for nukes, enacted a delay in plant approvals. Meanwhile, the fracking revolution made some planned and existing U.S. plants uneconomical.
In 2010, Ux Consulting predicted the world’s nuclear power plants would be able to generate 535 gigawatts of electricity in 2020. Now the prediction is just 408 gigawatts.
The surprising reasons range from the peculiar economics of nuclear fuel processing to unwanted inventories at dormant reactors and China’s plans for a massive new mine in Africa.
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