Why is everyone talking about ASX uranium shares like Paladin Energy lately?

ASX uranium shares have enjoyed a stellar year. And there may be more good times ahead.

| More on:
A miner stands in front oh an excavator at a mine site

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

If it seems like everyone is talking about ASX uranium shares lately, there's a good reason.

Last week uranium prices hit 15-year highs, trading for just over US$80 per pound. That sees the price of the radioactive metal, a critical element in nuclear power production, up 55% so far in 2023.

And it's put a rocket under Australia's leading uranium stocks.

Here's how these four producers and explorers have performed year to date:

  • Paladin Energy Ltd (ASX: PDN) shares have gained 54%
  • Bannerman Energy Ltd (ASX: BMN) shares are up 66%
  • Deep Yellow Limited (ASX: DYL) shares have gained 59%
  • Boss Energy Ltd (ASX: BOE) shares are up 118%

For some context, the All Ordinaries Index (ASX: XAO) has gained 1% so far in 2023.

Here's why ASX uranium shares have been catching tailwinds.

Why everyone's talking about ASX uranium shares

The uranium market has been caught in a classic supply and demand imbalance, sending prices surging.

After a lengthy pause in the wake of Japan's Fukushima disaster, many of the world's top economies – including China, the United States, India, Japan, and the European Union – are embracing nuclear energy to meet their carbon reduction plans while delivering reliable energy.

That's the demand side that's been helping boost ASX uranium shares.

On the supply side, explorers and producers have yet to catch up with the changing market dynamics.

Colin Hamilton, managing director for commodities research at BMO, noted (courtesy of Mining.com), "Utility contracting continues to pick up. [But] there is very little uncommitted production available to meet uncovered utility requirements."

Despite the surge in uranium prices this year sending ASX uranium shares rocketing, there could be more outsized gains to come.

According to Steven Schoffstall, director of ETF product management at Sprott Asset Management:

When you look over the longer term, there is a severe supply-demand imbalance that we see developing. If you go out to 2040 or so, you see about a cumulative 1.5-billion-pound shortfall in the supply of uranium. So, we think over the longer term, that's going to be conducive to much higher prices in uranium."

Indeed, the International Energy Agency (IEA) forecasts global nuclear capacity will need to double by 2050 to reach humanity's emissions goals.

How about Australia?

ASX uranium shares are well placed with their operations in Australia.

According to Geoscience Australia, the continent has the world's largest Economic Demonstrated Resources (EDR) of uranium.

But to date, Australia hasn't joined in the growing number of nations turning to nuclear energy for emissions-free power.

That position doesn't sit well with opposition energy and climate change spokesman Ted O'Brien.

"There is no credible pathway to net zero without nuclear energy," O'Brien said (quoted by The Australian).

Commenting on the COP28 summit taking place in Dubai he added:

This COP is the first time that we are expecting a major communique signed by our closest allies and partners (on nuclear energy) and Australia won't even be in the room…

If you look at Ontario in Canada, over the last few months they have quadrupled their order for small modular reactors. The UK are going hard on a mix of both small modular and large reactors…

The world is embracing a diversified mix understanding the importance of baseload technology and they're opting for zero emissions nuclear.

Australia's reluctance to embrace nuclear power certainly hasn't held back ASX uranium shares this year.

And the ongoing enthusiasm saw Bell Potter recently increase its target for the Boss Energy share price to $5.53. That represents a potential upside of more than 24% from current levels.

Motley Fool contributor Bernd Struben 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 Scott Phillips.

More on Energy Shares

Accountant woman counting an Australian money and using calculator for calculating dividend yield.
Energy Shares

Is the 11.3% dividend yield on Woodside shares for real?

Are investors really in line for an 11.3% yield from this oil stock?

Read more »

a close up of a man with wide open eyes and wide open mouth holding his head and reacting in shock and surprise to some share market ews.
Energy Shares

Why is the Strike Energy share price crashing 31% today?

This energy stock has lost half of its value in a month.

Read more »

A smiling woman with a cute dog flings her arm out of the window of a car
Dividend Investing

On the hunt for passive income? Here's what you need to know about the record Ampol dividend

Following today’s record declaration, Ampol shares trade on a juicy 7.2% dividend yield.

Read more »

a man sits on a rocket propelled office chair and flies high above a city
Earnings Results

ASX 200 energy stock Ampol charging higher on record 2023 sales

ASX 200 investors are bidding up the Ampol share price on Monday.

Read more »

two workers in hard hats and high visibility gear give celebratory fist pumps while checking paperwork at a processing site with equipment in the background.
Energy Shares

2 'low risk plays' amid surging ASX uranium shares

Fund manager Monash Investors recommends two particular ASX uranium stocks.

Read more »

an oil refinery worker checks her laptop computer in front of a backdrop of oil refinery infrastructure. The woman has a serious look on her face.
Energy Shares

Woodside share price dips to two-month low upon late news announcement

The oil and gas giant has revealed a major impairment cost for FY23.

Read more »

Coal Miner in the tunnels pushing a cart with tools
Earnings Results

Whitehaven share price crumbles on plunging half-year revenue

ASX 200 investors are bidding down the Whitehaven share price on Thursday.

Read more »

Happy man standing in front of an oil rig.
Energy Shares

How are Woodside shares avoiding the market selloff today?

This energy giant's shares aren't sinking like the market today. But why?

Read more »