In recent years, the fundamentals of the global uranium market have been improving as the market shifts from an inventory-driven market to a production-driven market, according to Uranium Energy Corp.

For starters: uranium is a naturally occurring element and is mined from deposits located in Kazakhstan, Canada, Australia and several other countries, including the United States. 

According to the World Nuclear Association (WNA), there are adequate measured resources of natural uranium to power nuclear energy at the current rate of use for about 90 years. 

The spot market bottomed in November 2016 at approximately $17.75 per pound U3O8 and stood at $56.25 per pound on July 31, 2023 (UxC U3O8 daily spot price). 

On the other hand, production fell to a multi-year low in 2020, around 122 million pounds, but began to recover in 2021 and totaled around 129 million pounds in 2022, still well below reactor requirements. 

Global supply and demand projections show a structural shortfall between production and utility requirements that will average more than 44 million pounds per year over the next 10 years and increase thereafter. 

Global uranium market

Uranium Energy Corp. refers that the current gap is being filled by secondary market sources, including finite inventory that is expected to decline in the coming years. 

As secondary supplies dwindle and existing mines deplete their resources, new production will be needed to meet utility demand. 

This will require higher prices to stimulate new mining investment, but market prices are still below incentive prices for many producers.

Uranium supply has become more complicated due to the Russian invasion of Ukraine, as Russia is a major supplier of nuclear fuel worldwide. 

Economic sanctions, transportation restrictions, pending legislation and the avoidance of Russian fuel buyers are causing a fundamental shift in nuclear fuel markets.