The enthusiasm of individual traders is reshaping the nuclear fuel market which generates one-tenth of the world’s electricity and drives up uranium-related stocks.

After languishing for a decade after the Fukushima disaster led Japan and Germany to shut down nuclear reactors, spot uranium prices hit $ 47 a pound from $ 32.25 in early August. They remain below their peak of $ 137 in 2007, according to price tracker UxC LLC.

US-listed shares of Canadian uranium giant Cameco Corp. CCJ 1.04%

jumped more than 20% in October and nearly doubled in 2021. His fellow Canadian miner Denison Mines Corp. DNN -0.67%

jumped 27% this month and nearly tripled this year. Uranium Energy Corp. UEC, based in Texas 0.72%

climbed more than 14% in October.

Behind the rally: A surge in uranium prices driven by individual traders, who have flocked to a new confidence that offers a cheap and easy way to bet on the nuclear fuel market. The Toronto-listed trust, led by Sprott Asset Management LP, has twice raised new cash from its shareholders and has sourced uranium since the summer. Its shares climbed to $ 12.49, up 49% since their inception in July.

Sprott’s purchases are helping to drain a glut of uranium that built up after the Fukushima disaster in 2011. Stop-and-start purchases by the trust led to sharp price swings with little or no justification based on it. on fundamentals such as the supply of mines or the demand for public services, according to traders.

Uranium stocks rose further on Monday after the world’s largest producer, Kazakh state-backed miner Kazatomprom, launched its own uranium fund in partnership with Kazakhstan’s central bank and Genchi Global Ltd., an Emirati investment company. The fund will start with $ 50 million and plans to raise up to an additional $ 500 million from institutional or private investors.

“This is obviously another new material withdrawal from the spot market,” said Jonathan Hinze, president of UxC. “This helps to eliminate any remaining surplus” of supply.

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But Mr Hinze said the Kazatomprom fund is unlikely to have the same upward effect on uranium prices as the Sprott fund. Sprott launched its second stock offering, for up to $ 1 billion, on September 10 and holds uranium valued at more than $ 1.6 billion.

Fluctuations in uranium prices echo exchanges in stocks such as AMC Entertainment Holdings Inc. and GameStop Corp., which have drawn strong following among individual day traders who flock to Reddit.

Even more than struggling video game stores and movie chains, uranium is an unlikely candidate to be rocked by an influx of money from individual traders. Utilities, miners, specialty traders and a handful of hedge funds and banks, including Goldman Sachs Group Inc., have long dominated the market.

Most U3O8, a lightly processed form of uranium that has not yet been enriched and turned into fuel rods, is sold under long-term agreements. Futures rarely change hands.

The sleepy market has accelerated. Traders estimate that between £ 70million and £ 90million will be traded in 2021, up from £ 50million in a typical year.

The recent popularity of uranium among traders is helping to reduce excess material.


Photo:

shamil zhumatov / Reuters

Shares of a third investment vehicle for physical uranium, Yellow Cake PLC, have jumped 54% in London this year. The fund said it plans to take delivery of £ 2million of uranium from Kazatomprom between October and December, bringing its overall holdings to nearly £ 16million.

“We have never seen this before in the uranium market,” said Amir Adnani, managing director of Uranium Energy, of the Kazakh and Sprott fundraisers. “In the long run, it has to be bullish. “

Mr Adnani said the higher prices are a welcome development for miners who have struggled with years of surplus uranium, but price fluctuations will cause most to hold back plans to dig further. “Let’s see where the dust settles,” he said.

Write to Joe Wallace at [email protected]

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