Long-term uranium contract prices have reached over 16-year highs due to supply uncertainties and increasing demand from utilities aiming to expand their capacity for powering data centers driven by AI. Current term prices are approximately $79 per pound, the highest level since 2008, with expectations for further increases in the coming months.
Cameco, a prominent uranium miner, reported that they are locking in contract prices with ceilings around $125-130 per pound and floors at $70-75 per pound, representing the best pricing seen in over a decade. Spot prices have also risen, currently around $82 per pound, following an 88% increase last year and reaching a 14-year high in February 2024.
The International Energy Agency predicts that nuclear generation could double by 2050, necessitating a corresponding increase in uranium supply. However, Plenisfer Investments warns that prices must exceed the current marginal production cost of $90-$100 per pound by at least 30% to incentivize new investments, suggesting a continued market deficit over the next decade.
Experts indicate that rising utility demand is narrowing the gap between term and spot prices. Companies like Uranium Energy Corp and Ur-Energy are aware of high demand for their limited uranium supplies and are poised to seek higher prices or opt for spot sales.
Goldman Sachs estimates that global data center power demand, currently accounting for 1-2% of total energy use, could grow by 160% by 2030. Nuclear energy firms are expected to gain from a U.S. push for Big Tech to invest in sustainable energy solutions to meet surging AI needs.