Goldman Sachs stated that driven by the acceleration of global nuclear power construction and reactor life extensions, the uranium supply gap is expected to widen to 32% between 2025 and 2045. Structural shortages will drive prices higher, with spot prices projected to reach $91 by the end of 2026, indicating at least a 20% increase. The long-term contract market has already shown signs of 'lower volumes and rising prices,' reflecting tightening supply and demand.
Goldman Sachs stated that with the latest developments in the global nuclear energy industry, uranium prices are not only expected to soar in the coming years but also likely to become the 'next gold.' The bank believes that an increasingly widening structural supply shortage will be the core driver of price increases.
In Goldman Sachs' latest 'Nuclear Nuggets' report, strategist Brian Lee forecasted that spot uranium prices would rise to approximately USD 91 per pound by the end of 2026, representing a potential increase of at least 20% from the current level of around USD 76. Although different mechanisms drive the spot and long-term contract markets, the bank sees upside risks for both markets in 2026, with long-term contract prices rising from USD 80 to USD 86 per pound since August.
The report highlighted that the core data supporting this bullish outlook lies in the sharp widening of the supply-demand gap. According to Goldman Sachs' model, the cumulative supply deficit for uranium is projected to reach approximately 13% between 2025 and 2035, further expanding to 32% between 2025 and 2045. This significant imbalance is primarily driven by the acceleration of new reactor construction globally and increased demand resulting from the life extension of existing reactors.
Goldman Sachs noted that the market has already begun reflecting these long-term demand changes. Long-term contract signings rebounded significantly in November, signaling the start of a new contracting cycle. Despite total signings so far in 2024 being lower than the previous two years, prices have continued to rise. This divergence of 'declining volumes with rising prices' strongly suggests tightening supply and demand dynamics ahead.
Long-Term Contract Prices Show Upward Guidance
Goldman Sachs believes that the long-term contract market better reflects the industry’s fundamental supply-demand dynamics compared to the spot market. Utility companies typically sign delivery contracts spanning three to ten years in this market. Since August, as countries continue advancing their new nuclear power construction plans, long-term uranium prices have risen from USD 80 to USD 86 per pound.
The current long-term price only reflects the fixed portion of the contract. According to uranium producers,$Cameco (CCJ.US)$ the floor and ceiling range for market-related contracts is between $70 and $130 per pound, implying a midpoint of approximately $100.
Goldman Sachs' company-specific models for CCJ and$Uranium Energy (UEC.US)$ also suggest that spot prices will reach approximately $91 by the end of 2026. The bank noted that contracting volumes have started to pick up since October and November, a momentum that could continue through 2026.
Supply Deficit to Widen to 32%
According to the updated uranium supply-demand model by Goldman Sachs strategist Brian Lee, global announcements of new reactor construction and adjustments to supply-side estimates have led to an additional 211 million pounds of cumulative net deficit between 2025 and 2045. The adjusted cumulative supply-demand gap for 2025 to 2045 has widened from 1.703 billion pounds to 1.914 billion pounds.
This model update incorporates a more detailed analysis of fuel products, forward-looking estimates of capacity factors for each reactor, and raises the average reactor lifetime assumption from 75 years to 80 years to reflect expectations of subsequent license renewals under electricity demand trends.
Goldman Sachs believes that this long-term structural deficit, which could reach up to 32%, is expected to drive significant price increases.
Global acceleration in nuclear power construction drives demand
In addition to tight supply, key changes on the demand side primarily stem from new capacity plans in countries such as Russia and the United States.
Russia has announced plans to double its installed nuclear power capacity. In response, Goldman Sachs' model adds 15 reactors of varying sizes to its forecast for 2025-2045, which is expected to generate approximately 15 million pounds of initial fuel loading demand.
In the United States, although new reactor construction had lagged behind other regions globally, the situation is changing. Based on an executive order requiring 10 reactors to be under construction by 2030 and a government partnership with CCJ, Westinghouse, and BAM exceeding USD 80 billion, Goldman Sachs has raised its expectations for U.S. reactor construction.
Goldman Sachs highlighted the collaboration between the U.S. government and Westinghouse Electric Company as well as$Fermi (FRMI.US)$plans to construct new reactors at nuclear power plants, with an expectation that the U.S. will build 20 new reactors between 2025 and 2045. Additionally, the model includes the restart of three reactors and the resumption of work on two reactors at the VC Summer project.
The report notes that, according to a rule of thumb, each 1 GW of nuclear power generation requires an annual uranium demand of 500,000 pounds. This means that once all these reactors come online, annual U.S. reactor demand will increase by 12.5 million pounds. Given that initial fuel loading typically amounts to three times the annual demand, this will result in an additional 37.5 million pounds of initial uranium demand.
Goldman Sachs states that these long-term demand prospects have undergone significant changes within just two months, while long-term supply forecasts have remained unchanged, laying the groundwork for a new contracting cycle and upward pressure on prices.
Editor/Doris