The Next Uranium Supply Shock Has Already Started! Justin Huhn

Key Takeaways:

• Term Market Reactivation: Huhn describes roughly a couple dozen utilities currently active in the long-term market, mostly seeking smaller volumes with delivery between 2027 and 2030 or 2033, following about 15 months of stagnation in which the term price sat between $79 and $81. He notes over 70 million pounds were added to the long-term tally in Q4 alone, with 28 million pounds officially booked year to date plus an unofficial ~45 million pound Indian contract split between Cameco and Kazatomprom, putting a September-to-present window above replacement-rate contracting.
• Contract Terms and Ceilings: According to Huhn, Cameco, Orano, and Kazatomprom are pushing market-referenced structures with higher ceilings on large contracts, while smaller brownfield restart volumes are being sold as base-escalated in the $90s and above. He cites Cameco's Grant Isaac indicating some ceilings are pushing $160 per pound, escalated with CPI.
• Spot Market Floor: Huhn characterizes spot as flat to slightly down after the backwardated spike above $100 in late January, with sufficient supply meeting average demand and traders moving Uzbek offtake and brownfield restart material. He believes a firm floor sits around $79 to $81, arguing utilities and likely Cameco would step in quietly if the price approached $80.
• Incentive Price Gap: Huhn argues investors are most mispricing what the incentive price actually needs to be, pointing out that restart miners remain cash flow negative at $84 spot and $93 term because production costs have escalated sharply. He contends a feasibility study showing $50 all-in sustaining costs will realistically come in at $75 to $80 or higher once a mine is built five years later, and that even assuming Etango, Tumas, Arrow, Phoenix, and MacArthur River at 25 million pounds, he sees a roughly 50 million pound gap by 2033.
• Kazakh Cost Inflation: Huhn says he sees no evidence that Strait of Hormuz disruption has caused any actual uranium supply interruption, noting Kazakh acid is largely sourced domestically with imports routed from Russia rather than through the strait, Husab produces its own acid, Langer Heinrich uses none, and Rössing is only partially exposed. He expects Kazatomprom to land in the low-to-mid range of guidance, with its own sulfuric acid plant needed both to ramp Budenovskoye 6 and 7 toward 15 million pounds and to hold output at declining assets, while newly implemented mineral extraction taxes of 15 to 22 percent replace prior rates of 4 to 6 percent.
• Japanese Demand Shift: Huhn notes Japan has restarted 15 of a possible 33 reactors against a stated target of 20 to 23 percent of the grid, and expects another three to five restarts by the end of the decade rather than an acceleration. He emphasizes that Japanese inventory sales into the market have diminished to almost nothing, that most remaining material is enriched or fabricated fuel unlikely to return, and that a utility which had not purchased since Fukushima was back in the market over the past eight months.
• Cameco and Orano Pipeline Risk: Huhn dismisses the Saskatchewan bridge washout and weather disruptions as a meaningful hit to Cameco's production, but frames the longer-term issue as replacement of Cigar Lake and MacArthur River, which he says are exhausted in 10 and 15 years respectively. He points to Dawn Lake exploration adjacent to ISO Energy's Hurricane deposit as a possible answer while doubting the two hold 150 million pounds combined, and says what both Cameco and Orano do for 2035 and beyond is a question raised at every industry conference.
• Equity Disconnect: Huhn observes equities have pulled back 25 to 30 percent, with some further, after getting overheated a couple of months ago, and considers the sector now roughly fairly valued on a project-by-project basis. His view is that what equities are not yet pricing in is the inevitability of higher prices that the rising term market is already pointing toward.

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