China's growing demand for uranium is shaping the global market as the country ramps up its reliance on nuclear power and may expand its nuclear arsenal, according to Citibank analysts.

Citibank reports that China's uranium imports are set to rise significantly in the coming years, driven by its growing energy needs and geopolitical considerations.

“Although China’s stockpiles are rising, current and future demand for uranium is expected to increase, and as a result, imports could rise in the coming years, supporting the bullish narrative for U3O8, according to our base case,” the bank says.

As of 2024, China's facilities will need 14.6 kilotons of uranium (38 million pounds), or 22% of global uranium demand, a figure that is expected to rise to 24.6 kilotons of uranium (64 million pounds), or 28% of global demand by 2030.

“Uranium demand from utilities will increase each year (in all scenarios) as the country actively builds its nuclear fleet,” the bank added. The base case assumes cumulative uranium demand from China of 250 kilotons of uranium (650 million pounds) between now and 2035.

In addition to energy demand, China's geopolitical position, including potential plans to expand its nuclear warhead arsenal to match those of the United States and Russia, could increase the country's uranium needs.

Citi estimates that this expansion would require 84.6 kilotonnes of uranium (220 million pounds) of uranium. However, China’s domestic uranium production remains modest, with output reaching just 1.6 kilotonnes of uranium (4 million pounds) in 2024, leaving the country heavily dependent on imports.

Citibank notes that China's current uranium stockpiles are about 173 kilotons of uranium (450 million pounds), built largely through imports from Central Asia and Africa.

The bank's analysts warn that China's future import policies could destabilize the global uranium market, as the country's share of global uranium demand is expected to rise to 36% by 2040.

As Chinese utilities increasingly turn to international markets, Citibank expects China's dominance of uranium purchases to increase, potentially leading to volatility in global uranium prices.