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Uranium 2020's best-performing commodity so far amid pandemic, soaring 31%


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Essential Metals & Mining Insights - January 2021

Industry Top Trends 2021: Metals and Mining

Uranium 2020's best-performing commodity so far amid pandemic, soaring 31%

Uranium prices have climbed 31% this year, amid declining prices in other metals as a result of the COVID-19 pandemic, making the nuclear fuel component the world's best-performing major commodity, Bloomberg News reported April 17.

"This is a bit of one-two punch in uranium's favor," the newswire quoted Horizon ETF's portfolio manager Nick Piquard.

"Not only has COVID-19 likely not impacted nuclear power demand very much, but it is certainly impacting supply," Piquard added, noting that many atomic power plants are expected to remain open during the pandemic partly because coal- and gas-powered plants are easier to switch on and off than nuclear facilities.

The uranium industry had suffered a slump in prices since the Fukushima disaster in 2011. This has led miners JSC National Atomic Co. Kazatomprom and Cameco Corp. to curtail production of the metal in the past three years to cut the global glut.

In April, Kazatomprom announced a reduction in operations at its uranium mines in Kazakhstan, while Cameco suspended production at its Cigar Lake mine in Saskatchewan, in response to the coronavirus crisis.

Cantor Fitzgerald analyst Mike Kozak said that the shutdowns wiped out about 46 million pounds, or about 35%, of the world's annual uranium production.

Analysts have earlier forecast that the threat of cascading indefinite mine closures due to the coronavirus outbreak could send the price of uranium soaring.

Uranium's price has risen US$8.52, or 35%, since March 23, when Cameco initially said it would suspend production at Cigar Lake, according to S&P Global Platts.

Based on the mean of assessed activity for U3O8 delivered over the next 12 months, S&P Global Platts estimated the 12-month average of uranium spot prices at US$33.04 per pound as of 1:00 p.m., April 21. ET. The price was 18 and 29 cents above the price Platts assessed on April 20 and April 17, respectively, and the highest it's been since Feb. 12, 2016.

S&P Global Platts and S&P Global Market Intelligence are owned by S&P Global Inc.