What’s fueling the uranium bull run?

Highlights

  • Uranium prices have hit nine-year highs on the back of strong demand and supply crunch.
  • The prices have gained more than 50% in the last one month.
  • Sprott Physical Uranium Trust has purchased more than 28 million pounds of physical uranium from the market from its launch.

The prices of uranium surged to nine-year highs last week, surpassing the US$50-per-tonne mark. The significant rise in raw uranium prices, which is also known as yellowcake, is underpinned by an imbalance in the market equilibrium. The price hike comes on the back of strong demand and incessant supply disruptions.

Uranium price rise

Uranium price rise | Source: Copyright © 2021 Kalkine Media

Also Read: Three ASX-listed stocks under spotlight amid skyrocketing Uranium prices

Uranium’s bull run

The prices of the element have shot up more than 66.06% in the past year, with more than 50% spike in the last one month alone.

What’s fueling the Uranium Bull Run?

Leading analysts, including Morgan Stanley, believe that the prices have been steered by Sprott Physical Uranium Trust, the world's largest physical Uranium fund. The recently established Physical Uranium Trust has purchased more than 28 million pounds of physical uranium from the market since its launch, creating a deficit in the market. The purchase figures also include the most recent purchase of 1.45 million pounds, carried out on 16 September 2021.

Uranium’s demand-supply dynamics

Uranium’s demand-supply dynamics | Source: © Pricelessphotos | Megapixl.com

The sudden rise in demand has impacted the demand-supply balance, creating a market deficit, lifting the prices of uranium to multi-year highs. The stronger investment demand for uranium is additionally fuelling the momentum by increasing the demand for yellowcake at a time when uranium mines are already suffering from the impacts of COVID-19, creating pressure on the supply side and boosting prices.

Related Article: Paladin Energy, Boss Energy, Deep Yellow: What is keeping these uranium shares higher?

High nuclear energy demand speeding up uranium rally

Uranium plays a significant role in the generation of nuclear energy, which is a clean source of energy. Triggered by the global ambition to accelerate the transition towards low carbon emission energy sources, the demand for clean energy is on the rise, which in turn is also fuelling the uranium rally.

Nuclear Energy

Nuclear Energy | Source: © Ncn18 | Megapixl.com

The US and China governments are backing nuclear power as part of their long-term goal to become carbon neutral in the next few decades. The US is looking to allocate funds from its infrastructure bill to revive the nuclear power industry, which accounts for about 19% of the country's total energy requirements.

Related Article: What is nuclear energy? What is its importance?

Bottom Line

With increasing investment demand and the rising call for clean energy, the price for Uranium may continue to rally amid widespread supply disruptions.

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