Concerns about tight supply due to geopolitical risks and other factors accompanied by high demand for nuclear power worldwide have uranium prices on an upswing. Major economies, including China, Japan, India, Europe, and the U.S., are increasingly embracing nuclear power and expanding their nuclear power capabilities, boosting uranium demand.
Given an uptick in uranium prices, uranium stocks Cameco Corporation (CCJ – Get Rating), NexGen Energy Ltd. (NXE – Get Rating), and Ur-Energy Inc. (URG – Get Rating) have soared significantly in price lately. However, these stocks are best avoided now due to their weak fundamentals and dim outlook.
Uranium prices extended their rally to $72.75 in October, the highest since touching $73 before the Fukushima disaster in 2011, as solid demand from utilities coincided with low inventories and tight supplies. Volatile fossil fuel prices due to limited oil supply and decarbonization goals from the world’s major economies continued to drive governments to invest in nuclear power production.
China is projected to build another 32 nuclear reactors by the decade’s end, and Japan plans to restart multiple plants and build new facilities. Also, discussion to build new plants or extend the lifespan of existing ones has ramped up in advanced economies, with the United Kingdom and Sweden among those working toward adding more capacity.
Further, in April this year, Finland started its first new nuclear reactor in more than four decades, the largest in Europe, and the U.S. brought a newly built reactor online for the first time since 2016 this year.
Moreover, according to a report by the World Nuclear Association, nuclear capacity is expected to grow by approximately 80%, and demand for uranium, the element from which fuel for nuclear reactors is fabricated, will nearly double by 2040. Currently, nuclear energy provides roughly 10% of the global electricity from about 440 power reactors.
These developments coincided with mounting worries about supply following shipments of nuclear fuel from Russia, which were again halted due to insurance concerns. In addition, political turmoil in Niger led to French nuclear group Orano suspending operations in the country. Also, escalating troubles in mines drove Canada’s Cameco to revise production downwards this year.
Uranium mining, enrichment, and nuclear component players will…
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