It seems like the uranium price is going to get worse before it gets better: as of July 4, it's sitting at $26.50 per pound. Overall, uranium is the cheapest it's been since May 2005, and it may be some time for the market to fully recover from the Fukushima disaster of 2011.
Despite low uranium prices, panelists in FocusEconomics' June 2016 report expect prices to gradually increase due to high nuclear demand from China, India and Russia.
Prices are projected to go up to $36 per pound in the fourth quarter of 2016, and even averaging $41 per pound in the fourth quarter of 2017.
While it could be awhile before uranium prices pick up, all hope isn't lost in the industry. Here's a a quick look at:
- global uranium production
- what is being said about investing in the uranium space, and
- shares that are on the rise
Uranium production forecast
First of all, physically owning uranium, like other commodities like gold and silver, isn't possible. With that in mind, the demand for uranium continues to grow: as of January 1, 2016, there were 439 nuclear reactors operable in 30 countries, as reported by the World Nuclear Association (WNA)
While uranium prices continue to be on a lower end, one thing for certain is that nuclear energy isn't going anywhere. In fact, worldwide production of uranium picked up in 2015, increasing by over 4,000 tonnes from the previous year to 60,514 tonnes. The WNA projects world uranium demand to be about 65,220 tonnes in 2016.
On top of that, it's expected that India and China will make up almost 70 percent of global energy demand, as reported by The Street. Currently, China has 33 nuclear power reactors in operation, with 21 under construction and more on the way. Five years from now, China's goal is to producer at least three times the amount of nuclear power that it does now.
And then there's India: the country aims to produce 26 percent of electricity from nuclear power by 2050, as reported by the WNA. India currently has 21 existing nuclear reactors with six more on the way, and has 60 more planned.
On July 7, the Economic Times reported that India is ready to ramp up its nuclear energy sector. The Times reported that Union Minister Piyush Goyal said that the country is close to setting a technology framework and "is very close to getting into the nuclear suppliers group."
Investing in uranium
As the Investing News Network (INN) has reported before, the market is on the cusp of a renaissance. Although uranium prices will take time to gradually rise, investors can still buy while the market is down. Some say that low prices mean it's a good time to get into the sector before it takes off.
Rick Rule, founder of Global Resource Investments, recently said in a video interview published on Mining.com said that the last bull market in uranium stocks generated a lot of wealth.
Although the last time the uranium market had an impressive run was 12 years ago, Rule said the experience that people enjoyed last time will cause them to be "extremely aggressive" participants this time.
"Everything that needs to be in place is in place for a truly incredible bull market," he said in the interview.
Uranium stocks rising
While uranium prices have been low, a number of uranium mining companies' shares have been successful:
- CanAlaska Uranium (TSX:CVV): year-to-date, the company's shares have increased 1,027.27 percent overall to $1.24. Over a one-year period, the company's shares have risen 726.67 percent overall;
- NexGen Energy (TSX:NXE): over one year, NexGen Energy's shares have increased 213.58 percent. Year-to-date, the company's shares have continued rising, 252.78 percent, to $2.54; and
- Anfield Resources (TSXV:ARY): Anfield Resources has steadily increased year-to-date, rising 121.05 percent to $0.21.
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Securities Disclosure: I, Jocelyn Aspa, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: Anfield Resources is a client of the Investing News Network. This article is not paid for content.