Cameco, for example, buys uranium from the spot market to cover some of its contracts with utility customers after it idled some mines. In other words, the commodity’s rally itself doesn’t necessarily reflect changes in the underlying supply and demand dynamics today. A lot of the spot market trading action in uranium occurs among financial players such as traders and banks, according to Mr. Miners participate in the spot uranium market too, but they primarily depend on long-term contracts with utilities. One is that Sprott isn’t buying the uranium directly from the miners. In the midst of the excitement, there are a couple of things to keep in mind. WallStreetBets, the forum that sent GameStop shares to the moon, has been filled with speculation about uranium recently. Other clean energy-related commodities such as cobalt and copper have also seen price bumps this year. Why the rally? Jonathan Hinze, president of uranium market research firm UxC, said that there has generally been more interest in uranium this year driven by demand for investments meeting environmental, social and governance criteria. That hasn’t always been the case for uranium, though, for which supply and demand tends to be more stable than a commodity such as oil. It isn’t uncommon for a commodity’s rally to spur a rise in the share prices of a company that extracts the said material.
The NorthShore Global Uranium Mining ETF has jumped 75%. Canadian giant Cameco’s shares are up 54% since the mutual fund made its debut, while NexGen Energy is up 68%. Uranium miners’ shares are ascending alongside the commodity’s rally. Last Friday, the fund increased its authorized issuance by another $1 billion to meet investor demand. It started an at-the-market equity issuance of $300 million in mid-August and in less than a month raised $244.7 million. The fund, Sprott Physical Uranium Trust, began trading on the Toronto Stock Exchange on July 19. The immediate catalyst seems to be a Canadian mutual fund that has started loading up on the commodity.
Spot uranium oxide prices are up more than 60% since mid-July and reached $42.50 per pound on Friday, the highest since 2014.