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US And EU Joint Statement Sees Uranium Rebound

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Uranium contracts rose slightly after a joint US-EU statement. ‘The West’ indicated that any efforts to undermine energy markets and avoid sanctions would be ‘directly confronted.’ An important statement was also made for nuclear sector. Cooperation to reduce dependence on Russian nuclear fuel will be intensified by the US and the EU. A transatlantic conference on advanced nuclear reactors is to be held this year. Nuclear energy can be seen as an alternative to conventional energy resources, on which Western economies are heavily dependent. Cameco (CCJ.US) and Constellation Energy (CEG.US) stocks are gaining slightly before the market opens. Due to its high ROIC, nuclear power can be a source of ‘cheaper’ energy, demand for which is likely to be increased by, among other things, the share of electric cars. In this way, it can help become more independent from the oil market, which is hugely influenced by OPEC+. The UK and the EU have recognized nuclear energy as ‘green’. Also in Japan, a country extremely negative about uranium after ‘Fukushima,’ has agreed to build new power plants and restart 17 reactors. 

Futures are pricing the price per pound of uranium above $50 and keeping the commodity in an upward trend. Source: TrendingEconomics

  • Cameco announced the reopening of its McArthur River mine, the world’s largest conventional mine. The Canadian giant, together with Brookfield Renewables (BEPC.US), has acquired Westinghouse Electric, a nuclear power plant developer of state-of-the-art small SMR reactor designs (49% stake in Cameco, 51% stake in Brookfield, respectively). In contrast, the world’s largest uranium producer, Kazatomprom (KAP.UK) forecasts output growth in the range of 8% to 14% by 2024;
  • Other companies likely to benefit from improving sentiment around nuclear power include Uranium Energy Corp (UEC.US), which is trying to recover after a recent report by the company’s stock-shorting Kerrisdale Capital fund, and Constellation Energy and (CEG.US), the largest operator of nuclear power plants in the US (21 reactors). Through Constallation Technology Venturs, the company is researching modern energy sources including SMR reactors.  The reaction of the ETF Global X Uranium (URNU.DE) fund to the US-EU joint enlightenment remains relatively muted

The Global X Uranium ETF (URNU.DE) has recently weakened against the performance of the Nasdaq (yellow line). It has not been able to sustain the gains of late 2021 and early 2022, but potential uranium supply issues could help Western companies rebound. Nuclear power is gaining support and supplies of uranium and nuclear products from Russia could be halted. Kazakhstan’s supply chain, on the other hand, may be constrained by China, which is reporting increasing demand for Kazatomprom uranium resources. Source: xStation5

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