Uranium futures price: Will rebound continue amid global scramble for alternative energy sources?
After dropping from a peak of nearly $65 a pound in April to below $50, the price of uranium futures has been rebounding in recent weeks as nuclear power plants are back in the spotlight.
The worsening energy crisis in Europe and eye-watering fossil fuel prices have forced many countries to seek alternative energy sources.
Will rising demand for alternative fuels help the uranium futures price to keep its recovery momentum?
What are Uranium futures?
Unlike other commodities such as gold, nickel, and copper, uranium is not traded on formal exchanges. Instead, buyers and sellers negotiate directly and privately to trade the fuel.
However, the Chicago Mercantile Exchange Group (CME) in partnership with nuclear market research company UxC LLC, launched uranium futures contracts in April 2007.
A futures contract is a legal agreement to buy assets at predetermined prices but deliver and pay for them later.
The fuel is either sold under a spot market contract, which usually consists of only one delivery, or under a long-term contract, which typically lasts between two and 10 years. Approximately 85% of all uranium is sold on long-term, multi-year contracts, according to ChemEurope.
A small number of private businesses and organisations, including UxC and Trade Tech also independently monitor the uranium market and develop price indicators.
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Uranium futures: Historical performance
According to data from economic data provider TradingEconomics, the uranium futures price steadily declined after hitting an all-time high in May 2007 at $148 a pound.
The price of the so-called “yellowcake” plummeted following a powerful earthquake in Japan in 2011 that caused a nuclear meltdown at the Fukushima plant. For a decade, the uranium future price sat between $15/pound and $30/pound, having fallen from around $60/pound in May 2011.
Uranium prices started to climb in the final quarter of 2021, hitting a nine-year high of $48/pound in September. The rally continued into 2022 on supply concerns, touching $65/pound in April – a level not seen since March 2011, according to TradingEconomics’ price chart.
Political unrest in Kazakhstan, the world's largest uranium producer, followed by Russia's invasion of Ukraine in February have also fuelled the uranium price rally.
The interest in an energy transition has also lifted the prospects of uranium demand as countries are shifting from coal, oil, and gas to nuclear power plants to reduce emissions.
Countries are either planning to include nuclear power in their energy mix or reverse their nuclear phase-out plan, as is the case in Japan.
Uranium futures price analysis
The price of uranium futures has dropped to below $50 since hitting a peak of $64.50 in April, touching the lowest price for 2022 at around $46/pound in mid-July.
The price has fallen on expectations that aggressive monetary tightening by major central banks, such as the US Federal Reserve (Fed) and the ECB, could increase the cost of capital and purchase of aluminium by commodity funds and nuclear energy producers, according to TradingEconomics.
Russian attacks on the power grids serving Ukrainian nuclear plants put cooling systems in danger and raised the prospect of a disaster, also hurt sentiment on the uranium market, it added.
However, potential shortfalls in global supply have offered support to the uranium price.
Australia’s Department of Industry, Science & Resources commented on the global production outlook in its report on 4 October:
The prospects of nuclear deployment have also improved amid sky-high coal and gas prices, it said.
As of 12 October, uranium futures were trading at $49.50, dropping about 6% in one month, but it has gained 24.7% in one year, based on TradingEconomics’ data.
Analysts' views and predictions
While refraining from issuing an Uranium futures price forecast, Australia’s Department of Industry, Science & Resources projected the uranium spot price to reach $57.9/pound in 2023 and $59.6/pound in 2024 – up from $51 in 2022 on risks of supply shortfalls.
“Uranium mines typically take a long time to obtain approvals, potentially drawing out any supply shortages over the longer term and creating a baseline for structurally higher prices over the rest of the 2020s,” the government agency said.
TradingEconomics forecast uranium futures to trade at $49.92 by the end of this quarter, rising to $54.09 in 12 months’ time.
Algorithm-based price forecasting service Wallet Investor viewed uranium futures as an “acceptable” long-term (1-year) investment.
The service’s uranium futures price forecast for 2022 projected the fuel to trade at $38.629/ pound in December 2022. The website’s uranium futures price forecast for 2025 saw the mineral potentially reaching a price of $44.186 in December 2025.
Wallet Investor did not issue a uranium futures price forecast for 2030.
It should be noted that uranium futures price predictions from analysts and price forecasting services can be incorrect.
Forecasts should not be used in place of your own research. Before investing, always conduct your own due diligence, and never invest or trade with money you cannot afford to lose.
FAQs
Are uranium futures a good investment?
Whether uranium futures is a suitable investment for you depends on your investing goals and risk profile. You should do your own research and never invest what you cannot afford to lose. Note that past performance does not guarantee future returns. And never trade money you cannot afford to lose.
Will uranium futures go up or down?
TradingEconomics has forecast that the price of uranium futures could possibly rise in the future, crossing the $50/pound mark in one year’s time, while algorithm-based forecaster Wallet Investor has issued a more moderate projection of $44.186 in December 2025.
Remember that analysts and algorithm-based prediction websites can and do get their forecasts wrong. Always do your own research before making an investment decision. And never invest or trade more than you can afford to lose.
Should I invest in uranium futures?
Whether or not you should invest in uranium futures should depend on your risk tolerance, portfolio size, goals, and your experience in the commodities market. You should do your own due diligence before investing. Remember not to invest or trade more than you can afford to lose.
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