Investors confident in uranium bull market

July 12, 2023, 9:30AMANS Nuclear Cafe

The current bull market for uranium seems to be heating up. “Fundamentals are strong, and new political incentives are in place to spur nuclear development,” according to an article on the Proactive Investors website, which also noted that the uranium supply “will need to increase significantly to meet the market’s needs if nuclear is to become a key source of energy in the global push to reduce carbon emissions.”

Supply and demand: The World Nuclear Association expects demand for uranium to increase dramatically during the next several years to fuel the growing number of nuclear reactors, according to the article. A number of factors are constraining supply however, including the international sanctions against Russia, the closing of mines, and the “physical uranium exchange traded funds (ETFs) purchasing pounds from the spot uranium market.”

Spot uranium prices have almost doubled in the past few years, from $31 a pound to $53 a pound, prompting renewed interest from investors. This interest, the article continued, could lead to the reopening of some mines, with further opportunities for price rises before the ceiling is reached.

Producers: The shares of both large and small uranium producers stand to benefit. One example, the article stated, is British Columbia, Canada–based Anfield Energy, a smaller firm that is taking advantage of the current market opportunities in the United States for uranium. Anfield has a number of mining interests in the western United States, and the company recently increased its uranium resource base by more than 60 percent with the acquisition of the Marquez-Juan Tafoya project in New Mexico.

Positive perspectives: Other investment companies are bullish on the uranium market. For example, global asset manager Sprott noted the following in its June uranium report:

The U3O8 uranium spot price gained 1.58% in May, increasing from US$53.74 to $54.59 per pound as of May 31, 2023. Uranium has posted a healthy 12.99% year-to-date return as of May 31, and continued to show strength and diversification relative to other commodities . . . The price for uranium continues to be pushed higher . . . by growing demand from utilities as they restock their inventories.

The Sprott report added, “While 2022 was the highest uranium cont[r]acting year in a decade, utilities are still not yet at the annual replacement rate. As a result, we expect the contracting cycle will accelerate as utilities are becoming increasingly concerned about the long-term security of supply.”

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