Benchmark uranium futures on the New York Mercantile Exchange are trading around $27 per pound, with prices getting a boost after top supplier Khazakhstan shocked the market on Jan. 10 when state-owned Kazatomprom announced a 10 percent production cut. All of Kazakhstan's uranium output is produced by the company.
Kazakhstan supplies 40 percent of the world's uranium supply, so any output cuts will have an outsized impact on the market, said Warren Gilman, CEO of CEF Holdings, a Hong Kong-based investment company. Almost all of the world's mined uranium is used for nuclear power generation.
In the company's announcement last month, Kazatomprom chairman Askar Zhumagaliyev said the company will cut 10 percent of its output this year, an amount equivalent to 3 percent of global production. The decision stems from an oversupply that contributed to a sustained crash in prices that saw prices slump to a 12-year low last December.