NuclearFuel Report WNA Uranium demand update.
Just aquick update to my future Uranium demand predictions after the WNA’s NuclearFuel Report provided last week.
These givea mid case of 130.000 tU (338M lb) burn rate per year in 2040 and a high caseof 184.300 tU (479M lb) burn rate per annum.
Manyinvestors will read this and think, 2040? That is a long, long time away! Whatis the rush to get into U stocks now in 2023? I will try and provide somecontext to show why.
Now in myopinion we are very much headed for the higher case scenario. All scenario’shave been updated to the upside and I wouldn’t be surprised they will again beincreased in 2 years.
So whatdoes this mean?
I will ignore:Overfeeding, restocking of currently depleted U stocks and financial demand.
Currentreactor burn rate conservatively is 180M lb.
2023projected mining was 150M lb, but with recent shortfalls of Kazatomprom andCameco we are likely to see no more than 145M lb… For 2024 there are alsoalready signs we will fall (well) short of projections with PEN recentlygetting into trouble and Urano in Niger suspending yellow cake production(although the mining continues for now).
We assume 2years inventories needed.
So currentshortfall is 35M lb (again ignoring restocking, overfeeding and financial demand!!)
2040 burnrate actually means FUEL demand, not yellow cake! So these pounds actually needto be out of the ground by 2038. Also the increase in annual demand times 2 iswhat is required to simply keep inventories at a conservative 2 years.
So for thebase case of 338M lb per annum we already need 338-180x2 = 316M lb extra ininventories by 2038. That comes to 21M lb per year average extra demand from2023 to 2038 just to maintain inventories! Every year!
So thatputs 2023 “actual” demand at 201M lb and 2038 “actual” demand at 359M lb…
So atcurrent rate of mining the shortfall is 56M lb this year and will be 216M lb by2038, with every pound shortfall having to be made up at some point in that 15year period.
In theupper case we are looking at 479M lb or 598M lb needed in extra inventories by2038 which comes to nearly 40M lb per year! We would need 220M lb this year and519M lb by 2038!
The currentmining shortfall is 75M lb increasing to a whopping 374M lb by 2038!
Add in thevery reall demand for current inventories shortfall’s, overfeeding (staringthis year and almost certainly going higher over the next couple of years at aminimum) and financial demand…and the setup is beyond spectacular!
For theshort term, the midterm and the long term!
For now themarket is obviously missing this. Many uranium stocks still go for a pittance.I fully maintain my outlook and remain with my prediction that we will seeUranium prices far exceeding anything in the past even adjusted for inflation.Which means I think the probability of U prices breaching $200 USD per pound isvery high!
As to whenwe will see the actual top I am less sure. But I suspect it is at least 2 to 3years away and could easily be 5 years away. How high it will go will depend onmany factors including the actuall Nuclear demand, Financial demand and howlong it will take to get to actual incentive prices and prices that will reallyget a move on the miners (triple digit Uranium prices). But a massive blow offtop and probably extended period(s) of (very) high Uranium prices appears to beinevitable, unless unpredictable factors impact the thesis.
(20min delay)