Is uranium the "next gold"? Goldman Sachs: Supply shortage rate will expand to 32%, with at least 20% upside by the end of next year

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 are also likely to become "the next gold," believing that the increasingly expanding structural supply shortage will be the core driving force behind the price increase.

Goldman Sachs strategist Brian Lee predicted in the latest "Nuclear Nuggets" report that by the end of 2026, spot uranium prices are expected to rise to around $91 per pound, compared to the current approximately $76, indicating at least about a 20% upside potential. Although different mechanisms drive the spot and long-term contract markets, the bank believes that both markets face upward price risks in 2026, with long-term contract prices having risen from $80 per pound to $86 since August.

The report stated that the core data supporting this bullish view lies in the sharp widening of the supply-demand gap. Goldman Sachs' model shows that from 2025 to 2035, the cumulative supply gap for uranium is about 13%, and this figure is expected to further widen to 32% from 2025 to 2045. This significant supply-demand imbalance primarily stems from the accelerated planning of new reactor constructions globally and the increased demand resulting from the extension of existing reactors' lifespans.

Goldman Sachs pointed out that the market has already begun to reflect this long-term demand change. The signing volume of long-term contracts in November saw a significant rebound, which is viewed as a signal for the start of a new round of contracting cycles. Although the overall signing volume from 2024 to date is lower than in the previous two years, prices have continued to rise, this phenomenon of "declining volume and rising prices" strongly suggests future supply-demand tensions.

Long-term Contract Prices Point Upward

Goldman Sachs believes that the long-term contract market better reflects the long-term supply-demand fundamentals of the industry than the spot market. Utility companies typically sign delivery contracts in this market for the next 3 to 10 years. Since August of this year, as countries continue to advance new nuclear power construction plans, long-term uranium prices have risen from $80 per pound to $86.

The current long-term prices only reflect the fixed portion of the contracts. According to uranium producer Cameco Corporation (abbreviated as CCJ), the floor and ceiling price range for market-related contracts is between $70 and $130 per pound, implying a midpoint of about $100.

Goldman Sachs' company-specific models for CCJ and Uranium Energy Corp. (abbreviated as UEC) also suggest that spot prices will reach about $91 by the end of 2026. The bank noted that since October and November, the signing volume has begun to rebound, and this momentum may continue until 2026.

Supply Gap Will Expand to 32%

According to Goldman Sachs strategist Brian Lee's updated uranium supply-demand model, announcements of new reactor constructions globally and adjustments in supply-side estimates have led to an increase of 211 million pounds in the cumulative net deficit from 2025 to 2045. The adjusted cumulative supply-demand gap from 2025 to 2045 has expanded from the previous 1.703 billion pounds to 1.914 billion pounds This model update considers a more detailed analysis of fuel products, forward-looking estimates of capacity factors for various reactors, and raises the average reactor lifespan assumption from the previous 75 years to 80 years to reflect the expected license renewals under electricity demand trends.

Goldman Sachs believes that this long-term structural shortage (up to 32%) is expected to lead to significant price increases.

Global Nuclear Energy Construction Accelerates Demand

In addition to supply tightness, key changes on the demand side mainly come from new capacity planning in countries like Russia and the United States.

Russia has announced plans to double its nuclear power installed capacity. Based on this, Goldman Sachs has added 15 reactors of various sizes to its forecasts for 2025-2045, which is expected to bring about 15 million pounds of initial fuel loading demand.

In the United States, although new reactor construction has lagged behind other parts of the world, the situation is changing. Based on executive orders requiring 10 reactors to be under construction by 2030, as well as over $80 billion in partnerships established by the government with CCJ, Westinghouse, and BAM, Goldman Sachs has raised its expectations for U.S. reactor construction.

Goldman Sachs primarily emphasizes the collaboration between the U.S. government and Westinghouse Electric, as well as the plans to build new reactors at the Fermi nuclear power plant, expecting that 20 new reactors will be built in the U.S. between 2025 and 2045. Additionally, the model includes the restart of 3 reactors and the resumption of 2 reactors from the VC Summer project.

The report notes that, according to the rule of thumb, the annual uranium demand for 1 GW of nuclear power generation is 500,000 pounds. This means that once all these reactors come online, the annual reactor demand in the U.S. will increase by 12.5 million pounds. Since the initial fuel loading is typically three times the annual demand, this will lead to an additional 37.5 million pounds of initial uranium demand.

Goldman Sachs states that these long-term demand prospects have changed significantly in just two months, while long-term supply forecasts remain unchanged, laying the groundwork for a new contracting cycle and driving up prices