Insights

The uranium market remains strong despite recent spot price declines, with tight supply, rising demand and long-term fundamentals driving a bullish outlook. Global support for nuclear energy is growing, with ambitious commitments to triple capacity and junior miners playing a key role in addressing supply deficits.

Big tech is turning to nuclear energy to fuel the massive power needs of AI-driven data centers. They're striking bold deals to develop small modular reactors (SMRs), sparking a surge in uranium demand and helping to support clean energy innovation. At the same time, global uranium supply remains inadequate to meet both current and future reactor requirements.

The uranium market has faced short-term volatility, including price declines driven by geopolitical tensions and economic concerns. Despite these challenges, the long-term outlook remains strong. Supply uncertainties from key producers like Kazakhstan and Russia are contributing to this volatility, but the fundamental supply-demand imbalance suggests further growth potential.

The uranium spot price has remained range-bound between $85 and $95 per pound, and ended the first half at $85.34 (June 30, 2024). Uranium miners fell in June, but bounced back in early July, outperforming the commodity YTD. 

YTD the uranium spot price has stabilized between $85-$95 per pound after an 88.54% rise in 2023, indicating a healthy correction in a bullish cycle. Uranium miners' performance improved, matching spot price gains.

Rising global nuclear energy commitments make uranium a compelling investment. Despite a slight dip in spot prices, there's potential for growth.

In March, the uranium market saw mixed results: spot prices fell, but miners' stocks rose due to a positive long-term outlook. We believe the uranium bull market has more room to grow.

Uranium markets pulled back in February after a rapid rise—in our view, this is a healthy pause in the ongoing uranium bull market. News from Kazatomprom and Cameco reinforce uranium markets' structural supply deficit.

February was lackluster for critical materials, but the backdrop remains very positive. The global commitment to clean energy hit a new milestone in 2023 as investment surged to an unprecedented $1.77 trillion.

Uranium price surged 11% in January, fueled in part by Kazatomprom's cut in guidance for 2024 production. Junior uranium miners were top performers , climbing 18.78%. 

2023 provided the long-awaited inflection point for the uranium contracting cycle. Long-term security of supply concerns, fanned by lingering geopolitical risks and the challenges of expanding primary production, are likely the key themes to watch.

The uranium price increased in October, reaching a 12-year high at $74.48 per pound. A growing supply deficit is helping to support higher price levels as the West focuses on reshoring supply chains. 

Uranium's performance helped the energy transition complex close higher in September. From a macro outlook, solar panels are emerging as a critical player in the global energy transition. 

Uranium and uranium mining stocks posted their best month in two years, as the price of U3O8 reached a 12-year high. YTD as of 9/30/23, physical uranium has risen 51.88% and uranium mining equities have gained 23.93%.

The global nuclear power industry is experiencing a revival. Geopolitical events and a surge in energy demand have shifted sentiment positively, with countries investing in new nuclear reactor builds, restarts and extensions. 

Uranium and uranium mining stocks had a strong month in August. YTD as of 8/31/2023, spot uranium and uranium mining stocks have climbed 25.49% and 21.52%, respectively, outperforming the frothy S&P 500.

Uranium had a strong August, contrasting with the decline of most energy transition metals due to China's economic troubles. The investment capital spurred by the U.S. Inflation Reduction Act (IRA) is turning the U.S. into a cleantech powerhouse.

Chemical reactions of fossil-fuel plants release more radiation into the environment than the operation of nuclear energy plants — 10 times more. Most nuclear-industry waste is relatively low in radioactivity, and only a small amount is produced. Estimates put the total waste from a nuclear reactor supplying one person's electricity needs for a year at the size of a standard brick.

The U3O8 uranium spot price 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.

Critical minerals are essential for the global energy transition as we gradually phase out CO2-intensive energy sources with cleaner sources, including nuclear, solar, wind, hydro and geothermal energy and greater use of electric vehicles (EVs).

The U3O8 uranium spot price climbed 6.01% in April, reacting positively to China's ambitious plans to expand its nuclear energy capacity. Global acceptance of nuclear energy has increased and positive momentum is building within the uranium industry.

The U3O8 uranium spot price fell slightly in March. YTD through 3/31/2023, uranium has gained 4.93%, demonstrating resilience relative to other commodities.

Uranium miners made headlines with significantly sized uranium contracts that reflect higher demand for long-term supply commitments. Uranium market fundamentals are the most positive in over a decade and are likely to continue to be the primary performance driver.

Looking ahead, we believe the uranium bull market still has a long way to run. Over the long term, increased demand in the face of an uncertain uranium supply is likely to support a sustained bull market.

Three key themes for uranium markets in 2023: 1) increased emphasis on energy security worldwide; 2) higher conversion/enrichment prices may boost spot uranium prices; and 3) the global energy transition supports the case for nuclear power.

While the price of U3O8 uranium has lagged since May 2022, conversion and enriched uranium prices have significantly appreciated. We believe that current demand, coupled with a shift away from Russian suppliers, is likely to support a higher U3O8 uranium spot price.

The U3O8 uranium spot price climbed 8.32% in October. Our positive outlook is supported by the unprecedented number of announcements for nuclear power plant restarts, life extensions and new builds that are all creating demand for uranium.

September was tough on uranium, which was negatively impacted by the month's drawdowns. We believe the uranium bull market remains intact, especially given that many countries are facing energy shortages and rocketing costs.

Uranium, both physical uranium and mining equities, had standout performance in August, in contrast to the weak results posted by the broader markets. We believe uranium's gains reflect the growing acceptance of nuclear power among global governments as they seek alternatives to meet ambitious energy transition and security goals.  

Energy infrastructure and commodity markets are coming into high focus. A new wave of technological changes geared towards higher energy efficiency is underway. We believe that nuclear energy and uranium miners are poised to benefit from this shift.

The Sprott Physical Uranium Trust (“SPUT”, TSX: U.U ($US); U.UN ($CA)) was launched just over a year ago in July 2021. While we were optimistic about the prospects for uranium, we could not foresee the tectonic shifts in the uranium sector that followed the launch and SPUT’s significant impact.

When SPUT began trading in late July 2021, there were many questions about how it would affect the uranium market. With 12 months of trading now behind us, we can confidently state that SPUT has dramatically altered the spot uranium market with far-reaching effects on much of the industry.

Research and development on small modular nuclear reactors (SMRs) are underway globally and generating tremendous buzz. But SMRs are not likely to contribute meaningful amounts of carbon-free power for another decade.