Uranium Prices Reach 16-Year High, Poised to Break $100 in Bull Market Extension

Uranium spot prices, crucial for nuclear energy production, soared to a 16-year high of $92.45 per pound this week. Analysts at Bank of America and Berenberg Bank indicate that the uranium market is heating up further, with sustained market tightness potentially driving prices above the $100 mark.

The surging rally is backed by governmental endorsement of nuclear power as a stable, low-carbon energy source. This support includes extending existing plant operations and proposals for new reactors in response to last year's soaring gas prices.

At the COP28 climate summit in Dubai, the commitment from 22 heads of state to increase nuclear capacity threefold by mid-century over 2020 figures injects further enthusiasm into an energetic market.

Since 2020, electricity prices have surged due to the impact of supply chain disruptions caused by Covid-19 lockdown, the Russia-Ukraine conflict upending the global energy ecosystem, and major oil companies supplying fuel to power plants reaping exorbitant profits—a phenomenon also known as "greedflation."

In such a scenario, power companies may be more inclined to accept higher uranium costs, as these expenses can be offset by the elevated electricity prices.

Large uranium reserves once dampened prices, deterring new mine construction due to low profitability. However, as these reserves diminished, prices have risen.

Meanwhile, production issues have affected the world's leading uranium producers, with Kazakhstan's Kazatomprom hindered by sulfuric acid shortages, planning a new acid plant for 2024, and Canada's Cameco facing production shortfalls due to equipment and ramp-up delays.

Uranium prices are rising amid a potential Russian supply ban and efforts by U.S. and European utilities to find non-Russian sources due to the Ukraine conflict. The U.S. House has passed a bill to prohibit Russian uranium imports, now awaiting Senate review. The U.S. heavily relies on Russian uranium, which accounts for a third of its imports. The nation's only enrichment facility, dormant for 20 years, restarted in October 2023. Should Russia retaliate with its own ban, it would intensify pressure on the U.S. to quickly diminish its reliance on Russian uranium. The U.S. Department of Energy is acting to increase domestic uranium production for advanced nuclear reactors on Tuesday.

Funds invested in uranium have experienced significant net inflows over the past months.Moomoo's trading data reveals consistent inflows for the Global X Uranium ETF, the largest nuclear ETF, since October. URNM and Sprott Physical Uranium ETF have sustained inflows since December 2023. The newly launched Sprott Junior Uranium Miners ETF has attracted inflows since January 2024.

The cash flow of Global X Uranium ETF

The first uranium bull market occurred from January 1973 to May 1978, primarily driven by two events: the establishment of the Nuclear Regulatory Commission in 1974 and the post-oil embargo construction of 441 new nuclear reactors in 1973. The second bull market took place from December 2000 to June 2007, influenced by the Commodity Super Cycle awakening and rising inflation during 2003-2007.