COMMODITIES 2025: Market participants see potential supply issues for U3O8 spot market in 2025

Despite a recent slump in uranium spot prices, some market participants see a potential for supply having trouble keeping up with demand in the years to come as issues that impacted the market in 2024 will continue into 2025.

Geopolitical tensions, supply chain issues and a supply-demand imbalance are several of the factors Paul Goranson, CEO of US-based uranium producer enCore Energy, said impacted the spot market for uranium concentrate, or U3O8, during 2024. "I think that demand is going to continue to go up and I just don't see things getting easier [in 2025]," he said Dec. 23.

"I think the risk profile going forward in the market is increasing," Dustin Garrow, head of marketing at uranium developer Deep Yellow, said in an interview Dec. 23, "and it's from all kinds of different reasons."

Both Garrow and Goranson noted the positivity seen in the market in early 2024, which carried over from unprecedented gains in late 2023.

"We started off the year on a very high note within the spot prices being over $100/lb," Goranson said, "I think that was driven a lot by expectations of supply challenges and some real demand at the time with some buyers looking to fill needs that drove its price up."

Platts' U3O8 spot price rose nearly 90% in 2023 and prices remained at these high levels in early 2024, when reports of production problems sent prices above $100/lb.

Goranson then pointed to the passage of a US ban on Russian uranium in May as serving as a catalyst for prices to decline as end-users turned their purchasing attention to other components of nuclear fuel instead of U3O8. The legislation bans imports of any Russian-enriched uranium after 2027 and sets a process under which US buyers could obtain waivers allowing imports of material until the end of 2027.

President Joe Biden in May signed into law a bipartisan bill banning the US import of enriched uranium from Russia. The law took effect Aug. 11, with the goal of reducing US reliance on Russian uranium for nuclear fuel following Russia's February 2022 invasion of Ukraine.

Russia has roughly 44% of the world's uranium enrichment capacity. According to US Energy Information Administration data, Russia accounted for 27% of enrichment service purchases by US utilities in 2023.

"The reality of the uranium ban happening really changed the conversion and enrichment market so much that [utilities] took a pause on any uranium buying and focused their budgets and funds into covering their enrichment and conversion needs," Goranson said. "I think that the pressure is going to keep growing."

This resulted in less buying interest within the U3O8 spot market and, in turn, led prices to fall. "We saw weakness starting in midsummer and continuing into now — there are just no committed buyers in the market."

Platts assessed price has fallen almost 20% in 2024, from $91/lb on Dec. 29, 2023 to $73/lb on Dec. 31, 2024. The price has declined nearly every week between October and December.

In retaliation to the US enriched uranium ban, Russia in November imposed temporary restrictions on the export of enriched uranium to the US.

Supply-demand imbalance

Despite multiple successful restarts, development of new mines and increasing U3O8 production rates in the US, challenges continue to afflict supply as demand signals remain strong.

Goranson pointed to supply chain issues, workforce problems and delays as just a few of the issues impacting these projects, "and I just don't see that easing off at all."

Producers Peninsula Energy, Ur-Energy, enCore Energy and Paladin are several of the companies facing hurdles as they seek to resume uranium production.

"It's going to take longer to see significant production," Garrow said, "It's going to take more capital and even if you add up all the US pounds ... it's" not a significant volume, Garrow said.

"We're going to continue to see market volatility in 2025 and I don't see anything settling out," Goranson said. "I think that this could be a continued gap between supply versus the actual demand, but we're still trying to figure out how the gaps are being filled."

Both sources also pointed to material from the world's largest producer, Kazakh controlled Kazatomprom, being increasingly sent to China and Russia as opposed to Westerns countries.

While US U3O8 production totaled approximately 50,000 lb in 2023, Kazakhstan produced around 5,500 metric tons of uranium content, or 14.3 million lb.

Change in US administration

Also at play is an upcoming US administration shift from Democratic President Biden to the reelection of former President Donald Trump, although many within the industry doubt the change will have a large impact on the uranium market or nuclear energy sector.

"I think that you're going to see continued support for the nuclear fuel cycle," Goranson said, "I don't think anything negative will happen."

"I think the Trump policies will be supportive of nuclear," Garrow said, adding that the President-elect's relationship with Elon Musk, a staunch supporter of nuclear energy, could help with the positive outlook.

As for tariffs, Goranson said he did not expect much of a change in geopolitics, "I don't see uranium trade changing at all." He added that he does not expect any changes to the current ban or waiver process and that recent statements by Trump planning 25% tariff of Canadian imports will not have a large impact.