TradeTech Forecasts Potential Uranium Supply/Demand Gap

Although near-term uranium demand is expected to decline as the nuclear power industry re-evaluates future growth following the Fukushima nuclear crisis in Japan, there exists a potential opportunity for uranium producers, according to industry analyst TradeTech.

Uranium demand from secondary sources, which today provide about 40 percent of total uranium supply, is expected to drop dramatically to less than 40 million pounds uranium oxide (U₃O₈₎ by 2014, as a US-Russian agreement to dismantle and downblend Russian nuclear weapons into uranium for commercial nuclear plants is not expected to be renewed after its 2013 expiration date. “This deficit leaves an opening for new uranium production to fill the supply gap and provides an opportunity for uranium producers with low-cost, high-grade mining projects to find a place in the future uranium market,” TradeTech President Treva E. Klingbiel told attendees at the 2011 Australian Uranium Conference in Fremantle, Western Australia on July 20. “If we adjust our expectations for production expansion — removing those projects that are high cost, politically sensitive, or lack financial backing, there exists a potential tight supply/demand situation over the next few years,” Klingbiel explained.

The uranium market continues to seek stable ground in the post-Fukushima period and industry participants are re-assessing future uranium demand as nuclear power growth is expected to continue in certain regions, albeit at a slightly slower pace.

Germany and Switzerland have announced plans to phase out nuclear energy, and Italy recently voted to abandon plans to resurrect its nuclear power program. These plans, as well as delays to some nuclear build programs, will result in an estimated 9 percent drop in uranium demand between now and 2025, according to TradeTech’s recent Uranium Market Study, which includes the company’s full spot and long-term price forecasts and regional analysis of uranium requirements. “While the Fukushima crisis is clearly a setback for nuclear, the industry shouldn’t lose sight of the fact that the overall trend in demand is moving upward, due in large part to projected nuclear power growth in China and other nations around the world,” Klingbiel said.

Marketwire