Uranium price forecast: Demand and supply are favourable

Uranium prices continued rising this week as market participants assessed the supply and demand dynamics following the coup in Niger. The closely watched Sprott Physical Uranium Trust jumped to $13.37, the highest point since June 23rd. It has jumped by over 25% from the lowest point this year.

Niger coup’s implication

One of the top geopolitical stories of this week was the coup that happened in Niger, a country in West Africa. The coup could have major implications for the uranium market since the country is the seventh biggest exporter in the world. It sells most of its uranium to European countries like France and Germany.

Uranium mines in Niger are still producing and exports are going on. But there are risks that a prolonged crisis could lead to supply disruptions. For one, ECOWAS, a west African economic bloc has warned that it could intervene militarily. Burkina Faso and Mali have also threatened to intervene if ECOWAS invades the country.

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On a positive side, there are signs that the crisis will be handled diplomatically in the coming weeks. If this happens, it means that the uranium market will see little disruptions. In a statement, Jonathan Hinze of UxC said:

“An event like this could take a bit more time to seep into the market psychology. We could very well still see bigger impacts in the days and weeks to come. All indications would be that this would be a catalyst for upward moves in the uranium price given the overall tight supply/demand balance in uranium at this time.”

Still, uranium’s fundamentals are still strong as demand continues rising as countries move to clean energy. For example, the US launched the first nuclear plant in over three decades in Georgia. 

Other countries like the UK and France are working on smaller modular nuclear energy plants as they move from coal and other fossil fuels.

Sprott Physical Uranium Trust price outlook

The Sprott Physical Uranium Trust is one of the best ways to invest in uranium in the US and Canada. It is the biggest physical uranium fund with over $3.4 billion in assets. 

Like other commodities, uranium price is usually impacted by demand and supplies. Now, the world is in a situation where demand for uranium is rising as supply bottlenecks remain. The supply challenge could continue if the coup in Niger holds and as looming sanctions on Russia’s uranium continue.

Therefore, the outlook of uranium and the Sprott Physical Uranium Trust is bullish in the near term. If this happens, the next level to watch will be at $15. This view will be confirmed if the price moves above the important resistance point at $13.66, the highest point in June.

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