ASX uranium shares boom to multi-year highs, bull market is just getting started: analyst

Some analysts think the uranium market has more legs to run

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ASX uranium shares are going nuclear after uranium spot prices jumped to 9-year highs of US$48/lb according to S&P Global Platts. A month ago, uranium was fetching for just ~US$30/lb.

ASX uranium shares going parabolic

The largest ASX-listed uranium player, Paladin Energy Ltd (ASX: PDN) has surged 115% to fresh 9-year highs in the past month.

The gains have tricked all the way down to small cap explorers such as 92 Energy Ltd (ASX: 92E) and Peninsula Energy Ltd (ASX: PEN), which have both more than doubled since August.

Even after a 60% jump in uranium prices, some analysts think that the uranium market has more legs to run.

What’s driving uranium?

The recent jump in ASX uranium shares and spot prices has largely been driven by Sprott Inc’s Physical Uranium Trust, listed on Canada’s Toronto stock exchange.

The fund has been actively buying physical uranium off the spot market, driving demand and tightening supply.

Kitco reported that the fund has bought 24 million pounds of uranium since mid-August, representing “about 14% of global reactor consumption”.

Kitco also highlighted that the “new demand in the marketplace has attracted new momentum players to the market, including retail investors from Reddit’s WallStreetBets, a popular financial discussion forum.”

Uranium market is “just leaving the station”

According to Kitco, some analysts have likened the uranium market as “a freight train that is just leaving the station as growing demand in a relatively tight market sparks a surge in prices.”

In an interview with Kitco News, Waaren Irwin, founder of Rosseau Asset Management said “the supply and demand outlook for uranium looked fantastic before Sprott came into the market.”

“The trust has come in and moved the inevitable rally forward a year or two.”

Irwin said that uranium plays into the global shift towards renewables and green energy. And that uranium demand will continue to grow on the backdrop of tight supply.

Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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