Uranium Price Update: Q1 2025 in Review

Chronic undersupply meets rising demand

The tailwinds that pushed uranium prices above the US$100 level largely remain intact, even in the face of trade tensions. Among those drivers are the growing uranium supply deficit.

According to the World Nuclear Association (WNA), total uranium mine supply only met 74 percent of global demand in 2022, a disparity that is still persistent — and growing.

“This year, uranium mines will only supply 75 percent of demand, so 25 percent of demand is uncovered,” Amir Adnani, CEO and president of Uranium Energy (NYSEAMERICAN:UEC), said at a January event.

Adnani went on to explain that after enduring nearly two decades of underinvestment, the uranium sector is grappling with one of the most acute supply deficits in the broader commodities space.

Unlike typical resource markets, where price surges prompt swift production responses, uranium has remained sluggish on the supply side, despite prices jumping 290 percent over the past four years.

According to Adnani, this chronic underproduction stems from 18 years of depressed pricing and lackluster market conditions, which have discouraged new mine development and shuttered existing operations.

“The fact that we're not incentivizing new uranium mines simply means the commodity price isn't high enough,” he said of the spot price, which was at the US$74 level at the time.

Now, with prices holding in the US$64 range, new supply is even less likely to come online in the near term, especially in Canada and the US. Meanwhile, demand is set to steadily increase.

“Next year, uranium demand is going up because there are 65 reactors under construction, and we haven't even started talking about small and advanced modular reactors,” said Adnani. “Small and advanced modular reactors are an additional source of demand that maybe not next year, but within the next three to four years, can become a reality.”

Uranium supply setbacks mount

With prices sitting well below the US$100 level — which is widely considered the incentive price — future uranium supply is even more precarious, especially as major uranium producers reduce guidance.

In 2024, Kazatomprom (LSE:KAP,OTC Pink:NATKY), the world's largest uranium producer, revised its 2025 production forecast down by about 17 percent, projecting output of 25,000 to 26,500 metric tons of uranium.

This adjustment from its earlier estimate of 30,500 to 31,500 metric tons was attributed to ongoing challenges, including shortages of sulfuric acid and delays in developing new mining sites, notably at the Budenovskoye deposit.

In January, a temporary output suspension at the Inkai operation in Kazakhstan further threatened 2025 supply. The project, a joint venture between Kazatomprom and Cameco (TSX:CCO,NYSE:CCJ), was halted in January due to a paperwork delay. While the news was a blow to the uranium supply picture, Rick Rule, veteran resource investor and proprietor at Rule Investment Media, pointed out that the move could benefit the spot price.

“The thing that's happened very recently that's very bullish for uranium is the unsuccessful restart of Inkai, which I had believed to be the best uranium mine in the world,” said Rule in a January interview.

Rule discusses his expectations for the resource sector in 2025.

“At the time that it was shut down, it was the lowest-cost producer on the globe," he continued.

"Because of many things, including an unavailability of sulfuric acid in Kazakhstan, that mine hasn't resumed production anywhere near at the rate that I thought it would. So there's 10 million pounds in reduced supply in 2025 and the spot market is already pretty skinny," Rule emphasized to INN.

Production resumed at Inkai at the end of January. However, as Rule pointed out, the mine failed to reach its projected output capacity in 2024, producing 7.8 million pounds U3O8 on a 100 percent basis, a 25 percent decrease from 2023’s 10.4 million pounds.

AI boom and clean energy set stage for uranium demand surge

Global uranium demand is projected to rise significantly over the next decade, driven by the proliferation of nuclear energy as a clean power source. According to a 2023 report from the WNA, uranium demand is expected to increase by 28 percent by 2030, reaching approximately 83,840 metric tons from 65,650 metric tons in 2023.

This growth is being fueled by the construction of new reactors, reactor life extensions and the global shift toward decarbonization. The rapid expansion of artificial intelligence (AI) technology is also set to significantly increase global electricity demand, particularly as more data centers are constructed.

“Electricity demand from data centres worldwide is set to more than double by 2030 to around 945 terawatt-hours, slightly more than the entire electricity consumption of Japan today,” an April report published by the International Energy Agency explains, adding that electricity demand from AI-optimized data centers is set to more than quadruple by 2030.

Nuclear energy is poised to play a crucial role in boosting global electricity production.

A recently released report from Deloitte indicates that new nuclear power capacity could meet about 10 of the projected increase in data center electricity demand by 2035.

However, “this estimate is based on a significant expansion of nuclear capacity, ranging between 35 gigawatts (GW) and 62 GW during the same period,” the market overview states.

While the more than 60 reactors under construction will meet some of this heightened demand, additional reactors and more uranium production will be needed to sustainably increase nuclear capacity.

Add to this the gradual restart of Japanese reactors, and the disparity between supply and demand deepens.

By the end of 2024, Japan had successfully restarted 14 of its 33 shuttered nuclear reactors, which were taken offline in 2011 following the Fukushima disaster.

Long-term price upside remains intact

Although positive long-term demand drivers paint a bright picture for the uranium industry, the current trade tensions created by US President Donald Trump’s tariffs have shaken the market.

Miners have also felt the pressure — as Adam Rozencwajg of Goehring & Rozencwajg explained in an February interview with INN, equities have contracted in value due to policy uncertainty.

Despite these challenges, uranium stocks are still positioned to profit from underlying fundamentals.

“I think that speculative fever is gone,” Rozencwajg said. "The prices have normalized, consolidated. They haven't been terrible performers, but they've consolidated, and I think they're now ready for their next leg higher.”

This sentiment was reiterated by Jacob White, Sprott Asset Management's exchange-traded fund product manager, who underscored the "buy the dip" potential of the current market.

“We believe today’s price weakness presents a potentially attractive entry opportunity for investors who appreciate the strategic value of uranium and can weather near-term turbulence,” he wrote.