Uranium doesn’t often grab headlines, but behind the scenes, a bull market is quietly building.
According to Citi, the conditions are in place for a sustained rally, with prices forecast to hit $100 per pound by 2026.
That would mark a return to levels not seen since the mid-2000s, when the last major uranium boom was underway. This time, the drivers are different, and, Citi argues, less widely appreciated by the market.
The bank’s latest commodities note sets out a bullish thesis. Supply remains tight, thanks to years of underinvestment in mining.
On the other side of the ledger, demand is strengthening; not only from China, which is aggressively expanding its nuclear fleet, but also from a new generation of smaller nuclear technologies and a subtle shift in the fuel cycle itself.
“Demand from China, small modular reactors, and enrichers is underappreciated,” the analysts write. The cumulative effect could be significant.
Small modular reactors (SMRs), long touted as the next frontier for nuclear energy, are now moving closer to commercial deployment.
Citi estimates that SMRs could account for as much as 20% of total uranium demand by 2040. While that still leaves time, the market tends to move in anticipation of structural shifts, and early signs of scale-up could accelerate buying.
Then there’s the role of enrichers. In the nuclear fuel cycle, enrichers extract usable uranium from mined material.
When enrichment is expensive, as it is now, with record prices for separative work units (SWU), operators use more raw uranium, a process known as overfeeding.
Citi expects this trend to continue, leading to further buying pressure for U3O8, the industry’s benchmark form of uranium oxide.
Add in the possibility of production shortfalls, and the bank sees a market skewed to the upside. “The bullish risk skew for uranium prices is significant,” they conclude.