Forecasts show an extra 20 million pounds of production by 2018 without buyers. As you can imagine, the price of uranium went down.
It reached its lowest price in October 2016 at $ 18.75 per pound. This touched the 13-year low price.
The downward trend began in 2011. The price of uranium was $ 72.50 per pound in January 2011. It has been steadily declining since then, down 74%.
The result is astonishing for many as a source of energy that many considered a “green” rescue from hydrocarbons a few years ago. Nuclear power generates safe carbon-free energy.
The problem is, it can wreak havoc. That’s what we found when the Fukushima disaster hit Japan.
Disappearance of Nuclear Energy
The earthquake and tsunami damaged the Fukushima Daiichi nuclear power plant in March 2011. The quake damaged a reactor. The tsunami then flooded the area, creating intense backups.
Without safety forces, cooling water could not enter the plant. This led to an elusive reaction, the dismantling, the greatest fear of all nuclear power plant operators.
He was harmed by a series of human errors. The operator, Tokyo Electric Power Company, was not fully prepared for the situation.
The result killed the nuclear power industry.
Fukushima turned the world against nuclear energy. Germany shut down all its reactors in response. Uranium demand fell and the price of uranium fell.
This eventually led to Cameco Corp. the main uranium producer led to a cut in production in early November 2017. The company’s profits fell and fell. Efforts were made to maintain profitability. He finally announced that he would suspend operations at the McArthur River mine for 10 months.
Cameco’s decision reduced the surplus by just £ 5 million … and then it became unthinkable: the world’s largest uranium producer continued. Kazakhstan state-owned uranium miner Kazatomprom reduced production by 20% over the next three years.
The result could be a huge uranium bull market.
The price of uranium and the enormous amount of uranium for producers
Shares of Uranium Holding Corp., which has physical uranium for investment, rose in response. Shares rose 30% in a month and a half.
Shares of uranium companies also rose. However, this is just the beginning. Analysts covering the uranium sector believe these cuts could add $ 30 a pound to the price of uranium. That’s more than double the current price.
It will be wonderful for uranium producers. Cameco and Ur-Energy Inc. companies like this will have higher revenues and profits.
This seems like great news for the uranium sector. It’s a story we’ll continue to see in 2018.