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(Bloomberg Opinion) — Uranium is having a moment in 2020, climbing a third in six weeks while much of the commodities universe melts down.
Years of poor economics and weak investment, combined with the impact of pandemic-related mine closures, are adding up to a supply squeeze, despite demand softened by industrial lockdowns. There will be no swift return to lofty levels last seen over a decade ago, but the metal may still be the only one to end the year with a record shortage and higher prices.
The start of the last bull run had plenty of similarities to today. Supply was suffering the effect of a long run of unimpressive prices. Thanks to revived interest in nuclear power, the spot market price for uranium surged by a factor of 13 between 2003 and 2007.
That hastened a production splurge that put the industry into a steady downward slide, worsened by the Fukushima disaster in 2011. It then bumped along at levels that, adjusted for inflation, were near historic lows.
With little incentive to explore or produce more at depressed prices, the supply-demand balance was still delicate even in 2019. Then the coronavirus epidemic struck, triggering even more curtailments at top producers Kazatomprom and Cameco Corp., among others.
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