Uranium prices don’t behave like other energy commodity prices — they’re dependent on geopolitical events and the global economy, and they’re incredibly difficult to predict.
Recently, nuclear industry consultant UxC reported that the per-pound price of spot uranium had dropped noticeably. What’s significant about the news? Well, unlike with other commodities on the global energy market, predicting future movements in the price of uranium presents a more complex challenge for analysts. UxC is the only entity among journalists, investment bankers, and consulting firms that has been able to reliably forecast the cost of uranium, and even its predictions are made with a wide margin of error.
What, then, are investors and uranium producers to do? Let’s explore a few well-tested methods for this analysis.
Uranium Prices Don’t Correlate with Oil Prices
Uranium prices reached a peak immediately following the oil crisis of the early 1970s, which led analysts to believe that there was a correlation between the costs of the two substances.
However, as Irina Dorokhova of MINEX Central Asia argues, this alleged link between uranium and oil failed to reappear in the period following the 1978 oil crisis, discrediting that hypothesis. “It seems that uranium price responds to transformative events and trends in the world economy rather than to the movements in the oil market,” she notes.
So What Does Influence Uranium Prices?
Though oil prices aren’t reliable, there are some other indicators that are useful in predicting the cost of this volatile commodity, including macroeconomic events, political conditions in uranium-producing states, and new nuclear plant proposals or shutdowns.
As a core building block in nuclear power generation, uranium prices are susceptible to influence by the overall outlook for large-scale nuclear energy projects. In 2015, the Nuclear Energy Institute reported that nuclear plants powered 19.5% of U.S. electricity, generating 797.2 billion kilowatt-hours. Given that nuclear plants are powered by uranium, it’s logical to conclude that any predictable surges in demand for nuclear power will be reflected in the cost of uranium.
Nuclear energy also presents a sustainable power source for eco-conscious countries who need to jumpstart sizable industrial and urban development projects. As Peter Maloney notes in an article for Utility Dive, President Trump “likes nuclear power, and he may push the zero-emission attributes of nuclear plants.” With an advocate in the White House, the uranium market may soon see a boost.
Uranium prices tend to mirror changes in nuclear power production, perhaps most notably when a country decides to build or restart nuclear plants, or when a major nuclear accident occurs. Global political events, such as U.S. sanctions against a uranium-producing country like Russia, will also usually impact prices.
Finally, worldwide economic conditions will also factor into the price of uranium. When economies face periods of crisis (or are expected to enter a period of crisis sometime soon), utility companies seek cheaper fuel alternatives. Currently, natural gas offers a lower-cost alternative, which in turn decreases wholesale power prices as well as uranium prices. Yet even without a worldwide economic downswing, less expensive energy sources can attract more buyers and drive down demand for uranium.
Safe Uranium Mining
Even as prices fluctuate, uranium mining operators must continue to maintain safe conditions for the sake of workers and surrounding communities alike. Because dust is one of the most significant problems associated with any mining operation, operators must take steps to control fugitive dust particles that could potentially escape into the air and surrounding water supplies.
Midwest Industrial Supply, Inc., offers a suite of patented dust control products that have been tested and certified environmentally safe by the U.S. Environmental Protection Agency and the Canadian Environmental Verification Program. Our synthetic fluid and resin binder EK35® adheres to surface aggregate in order to clamp down on the vital fines that hold your roads together.
No matter how complex your site’s dust control needs, Midwest has the products and expertise to keep your operation safe, efficient, and compliant with industry regulations.
