Plenisfer Investments | The long-term bull cycle for uranium and the role of utilities in the 2023 rally
In Short
Marco Mencini
Head of Research of Plenisfer Investments SGR
In a comment published last February we estimated that the price of uranium could reach $60 per pound by the end of the year. This threshold was already exceeded in the first days of September, due to a growth in spot prices of around 30% since the beginning of the year. This trend places uranium as one of the best performing raw materials of 2023 (Source: Bloomberg).
While the 2006-2007 uranium rally - which took the price as high as $137 a pound - was driven primarily by hedge funds, the current bull phase is primarily driven by forward purchases of utilities and select producers. it is therefore healthier, sustainable and far-reaching.
In particular, utilities have reappeared on the market after two years of substantial absence. In the first half of the current year, utilities signed long-term uranium purchase contracts for 107 million pounds, a value at a 10-year high and compared with 125 million for the whole of 2022 (Source: 2022 Term Contracting Review).
