Without a doubt, 2021 has been a triumphant year for ASX-listed uranium shares. To illustrate, many companies with exposure to the silvery-grey metal have surged 100% or more in value this year.
The heightened concerns of climate change have nudged governments to take their emission targets more seriously. In turn, countries are beginning to see nuclear energy as a key piece in the net-zero carbon emissions puzzle.
At the same time, uranium supply has been uncertain following years of low prices. This has made many operations uneconomical in the past. However, as the supply and demand dynamics have come into effect, the price of uranium has rallied in response to higher demand.
While it can be useful to understand the past, investors of ASX uranium shares are likely now looking at what next year could bring for their investments.
Mixed outlook for ASX uranium shares
Unfortunately, no one has a crystal ball informing them of a certain future. As such, experts and market commentators have mixed thoughts on what 2022 could bring for the uranium price — which is inextricably linked to the performance of ASX uranium shares.
In a recent interview, Standard Uranium president and CEO, Jon Bey shared a bullish outlook for uranium in the year ahead. Despite pulling back from its new nine-year high, set in September, Bey believes uranium could be in for a multi-year price increase.
There's demand coming from all over the world. China has just announced 150 nuclear reactors to be built in the next 15 years. And that's only one region. The U.S. has 95 nuclear reactors in operation. We now have bi-partisan support from both sides of government wanting nuclear reactors to stay operational longer, which is going to drive more demand.
Jon Bey, Standard Uranium
Meanwhile, commodity strategists at Morgan Stanley are taking the opposite stance. Although they share the belief there's further potential upside in the uranium price, the strategists are unconvinced the rally can be sustained in 2022. This paints a less positive outlook for ASX-listed uranium shares.
Furthermore, the team believes the underlying supply and demand for uranium remains relatively unchanged in the last few months. Morgan Stanley's analysts hold a price forecast of US$49 per pound by 2024. For context, uranium futures are currently trading around US$45.85 per pound.
Hard act to follow
It certainly will be challenging for ASX-listed uranium shares to continue to deliver the magnitude of returns they did in 2021. As a quick recap, here are some of the more astonishing performances from uranium companies so far this year:
- Paladin Energy Ltd (ASX: PDN) up 217% year-to-date (YTD)
- Bannerman Energy Ltd (ASX: BMN) up 220% YTD
- Lotus Resources Ltd (ASX: LOT) up 161% YTD
- Deep Yellow Limited (ASX: DYL) up 92% YTD, and
- Peninsula Energy Ltd (ASX: PEN) up 79% YTD
Investors of any of the above companies have enjoyed staggering returns. However, the new year will undoubtedly come with its own set of surprises. Ultimately, the price-performance will likely be dictated by supply and demand next year.
