Research & Knowledge Management department of Samruk-Kazyna JSC presents uranium market overview & outlook

Uranium production in Kazakhstan

In 2016, uranium production in Kazakhstan is estimated at 24,000 tons, which was 1.7% higher YoY. In 2017, the uranium production is expected to decline by about 8% or 2,000 tons due to weak market conditions triggered mostly by a global oversupply. This represents about 3% of the total global output. The production is expected to rise once market conditions improve. In response to the production cut plans, uranium prices recovered to above USD24lb from of USD17.75lb as at end-November 2016, its lowest level since February 2015. 

All of the produced uranium is exported, primarily under long-term contracts, as Kazakhstan does not presently possess nuclear power generation capacity. China is the largest importer of Kazakhstan’s uranium and accounts for over half of total exports (56%). 

World uranium supply & demand

Canada and Australia are one of the largest uranium producers (22% and 9% of world supply in 2015, respectively), following Kazakhstan (39%). In 2015, uranium mines supplied some 71,000 tons of uranium oxide concentrate, which contains 60,496 tons of uranium. The uranium supply also comes from secondary sources including stockpiled uranium held by utilities. 

Currently, demand for uranium is generated by 439 nuclear power stations with a total net installed electricity capacity of 380 GW. In 2015, 28% of global demand was from the US. China and South Korea accounted for 12% and 8% of global uranium demand. World uranium consumption is projected to grow at an average annual rate of 4.8% from 2015 and to total 97 900 tons of U3O8 in 2020. The growth of the demand will be provided by new reactors, as 58 reactors are under construction and 512 reactors ordered and planned. In 2016, the US started its first new reactor in 20 years and four more are under construction.

Japan plans to restart 23 reactors. 

The majority of new reactors is expected to come from developing markets where demand for power is growing rapidly, like China and India. The opening of new reactors is expected to more than offset demand declines from reactors being deactivated, which in turn, will help to correct the supply-demand imbalance.

Uranium price outlook

Uranium spot prices fell from 2016’s high of USD35.38lb in January to USD17.75lb as at end-November 2016, their lowest level since February 2005 and recovered to around USD20lb by year-end as oversupply remained intact. The uranium market is seen to be potentially volatile owing to both politics and economics. The uranium market is expected to remain well-supplied through 2020. As a result, spot prices are projected to stay depressed at lower USD30lb. It is expected that very few mines will be developed at low prices level. Thus, in the long-term uranium prices will be supported by shortages of supply combined with rising future global demand. There are several price supporting factors, such as major American and European nuclear reactors are coming off supply in 2017 and 2018 and will be looking for long-term contracts once again.

Disclaimer & Disclosures

The Research and Knowledge Management Department Strategy and Portfolio Investment Block of JSC “Samruk-Kazyna” (hereinafter referred to as “the Research Team”) is responsible for the analysis of this report. The Research Team certifies that all views expressed in this Research report (hereinafter referred to as “Report”) reflect the Research Team’s personal views.

The Report is based on the information taken from the sources which the Research Team considers reliable and takes every care and precaution to ensure that information related to the Report published on the corporate website of JSC “Samruk-Kazyna” is accurate and regularly updated, but neither the Research Team nor JSC “Samruk-Kazyna” make guarantee, warranty of any kind, express or implied, or make representation as to the accuracy or completeness of the information contained in the Report or otherwise, and it should not be relied on as such. 

Neither the Research Team nor JSC “Samruk-Kazyna” or any of its officers, employees shall be liable for any losses or damage that may result from use of the information contained in the Report as a consequence of any inaccuracies in, errors or omissions, if any, from the information which the Report may contain or otherwise arising from the use and/or further communication, disclosure, or other publication of the information contained in the Report. 

This Report is solely intended for general informational purposes and is provided for internal distribution within JSC “Samruk-Kazyna”. This Report is not in any sense a solicitation or offer of the purchase or sale of securities or any assets in any jurisdiction.

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