Why ASX uranium shares are bouncing back on Friday

It’s been a good start to the day for many ASX uranium shares…

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ASX uranium shares are again finding a footing on Friday after rallying to multi-year highs in mid-September.

The largest ASX-listed uranium player, Paladin Energy Ltd (ASX: PDN), opened 5.63% higher to 75 cents before its gains faded to a rise of 1.69%, or 72 cents.

Emerging producer Boss Energy Ltd (ASX: BOE) is catching bids today. It was up 4.26% to 24.5 cents in early trade before slipping back slightly to 24 cents.

Explorers including Peninsula Energy Ltd (ASX: PEN), Lotus Resources Ltd (ASX: LOT) and Vimy Resources Ltd (ASX: VMY) are also trading higher, up 4.76%, 2%, and 7.5% respectively.

Advanced uranium explorer Deep Yellow Limited (ASX: DYL) fell slightly before bouncing back to 93 cents, up 2.2%. However, recently listed 92 Energy Ltd (ASX: 92E) is down 2.13% to 69 cents.

Upbeat news for ASX uranium shares overnight

The Global X Uranium exchange-traded fund (ETF) rallied strongly overnight, up 3.9%.

The uranium ETF provides investors with access to a broad range of global companies involved in uranium mining and the production of nuclear components.

Another likely catalyst for the rise in ASX uranium shares on Friday was an announcement out of the world’s largest physical uranium fund, the Sprott Physical Uranium Trust (SPUT).

The fund actively invests in physical uranium. It takes supply off the spot market and stores it in secured locations with highly reputable uranium operators.

On 17 September, the fund had accumulated 27.7 million pounds of uranium. By comparison, uranium investment firm Yellow Cake PLC reported total spot volume for 2020 of 92.2 million pounds.

This morning, Sprott’s Twitter revealed the fund had exceeded the 30 million pounds mark.

Sprott’s buying frenzy has been viewed as the catalyst that pushed uranium prices from US$30/lb in mid-August to 9-year highs of approximately US$50/lb by 17 September.

Uranium prices have since cooled off, trading around US$40/lb.

Morgan Stanley isn’t convinced the supply-demand fundamentals have changed in a manner to justify the recent price rise.

While experts are divided on current uranium prices, there’s no denying that more countries are showing interest in nuclear reactors.

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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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