Morgan Stanley stated that the decline in mining output has reduced global uranium supply. Additionally, Russia has issued a ban on the export of enriched uranium to the usa, and if the eu is also included in the ban, it may exacerbate the tightness of global uranium supply.
After the surge in nuclear power stocks, is uranium also going to stop falling and start rising?
On November 18, morgan stanley commodity strategist Amy Gower and her team released a report stating that since the beginning of the year, morgan stanley has been bearish on uranium prices, but recently, uranium supply has tightened, improving the risk-reward ratio for uranium.
First, the decline in mine output has reduced global uranium supply; secondly, Russia has issued a ban on the export of enriched uranium to the usa, and if the eu is also included in the ban, it may exacerbate the global uranium supply tightness.
Since January of this year, the spot price of uranium has steadily fallen from $106 per pound to $77 per pound, marking the lowest level since November 2023, primarily due to weak demand and the reopening of uranium mines.
It is worth mentioning that unlike the continuous decline in spot uranium prices, nuclear power stocks have surged recently, with nuclear power concept stocks and uranium mining concept stocks rising yesterday, paladin Energy listed in Sydney, Australia, gained 5.49%, Deep Yellow rose 7.02%, and BOSS Energy increased by 7.34%...
Tightening on the supply side: mine production cuts, Russia issues ban on enrichment uranium exports.
At the end of October, the French multinational energy company Orano Group announced that due to transportation issues, Niger's only operating mine would enter a maintenance shutdown, with this mine having a uranium capacity of 2,000 tons, accounting for 3% of global uranium supply.
In addition, several small miners located in Namibia, the USA, and other places have announced production cuts in the 2024 and 2025 fiscal years due to slower-than-expected production increases, lower ore grades, and local community opposition.
According to morgan stanley, these production cuts will lead to a total reduction of 2,600 tons of uranium supply in 2024 and 2025, accounting for 4% of global supply, offsetting the increased expected output of 2024 from Canadian uranium trading company Cameco due to improved mine performance.
In addition to the tightening of the supply side from mines, the export ban on enriched uranium from Russia may further exacerbate the uranium supply tension - Russia controls nearly half of the global isotope separation capacity required for reactors and supplied more than a quarter of the enriched uranium to the USA last year.
On November 15, according to state media reports, Russia announced a temporary restriction on the export of enriched uranium to the USA, allowing only companies authorized by export control authorities to export.
Previously in May, the Energy and Natural Resources Committee of the US Senate issued a statement indicating that the Senate had approved a bill to ban the import of Russian uranium. On November 13, the Biden administration signed a "Ban on Importing Russian Uranium Act," which prevents US companies from importing enriched uranium produced in Russia.
In 2023, 28% of the USA's enriched uranium imports came from Russia, but by August of this year, due to the enactment of the ban on Russian uranium imports, this percentage has dropped to zero.
morgan stanley believes that if Russia only imposes restrictions on enriched uranium exports to the USA, the market can still mitigate the impact of uranium shortages by adjusting global trade flows. However, if the EU is also included in the ban, global uranium supply may become more strained until more enriched uranium capacity is completed.
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