Uranium

Uranium stocks rally as Belgium extends nuclear phaseout; spot prices remain sidelined

Tue 30 Aug 22, 12:32pm (AEST)
Uranium 4 Nuclear
Source: iStock

Key Points

  • Belgium plans to extend the life of two nuclear power plants by 11 years
  • Elon Musk described the western shift on nuclear power as 'wise actions'
  • Uranium spot prices remain mostly unchanged in the last 12 months

Most ASX-listed uranium stocks were up more than 10% in early trade on Tuesday following a massive move for overnight uranium stocks and ETFs.

Sprotts's physical uranium trust - which buys and holds physical uranium - rallied 4.4%.

The Global X Uranium ETF jumped 7.4% to an almost three month high. The ETF is a targeted play on uranium mining and the production of nuclear components. Its holdings include a few ASX-listed names such as Paladin Energy (ASX: PDN) and Boss Energy (ASX: BOE).

Global X Uranium ETF chart
Global X Uranium ETF (Source: TradingView, Annotations by Market Index)

Elon Musk: "Wise actions"

On Monday, Tesla CEO Elon Musk replied to a Twitter post of a Wall St Journal article titled "Western Countries Breathe New Life Into Old Nuclear Plants", with "wise actions."

The article said Belgium plans to extend the life of two of its reactors by 11 years and Germany is still rethinking its decision to shut down its last three reactors by the end of 2022 amid a gas shortage.

Musk sits on the fence between fossil fuels and greener forms of energy. At an oil and gas event in Norway, he said "realistically I think we need to use oil and gas in the short-term, because otherwise civilisation will crumble."

He said the transition towards sustainable energy will "take some decades to complete ... at this time, we actually need more oil and gas, not less."

Still, Musk joins names like Bill Gates and Michael Burry in support of nuclear power. On August 27 he said "countries should be increasing nuclear power generation. It is insane from a national security standpoint and bad for the environment to shut them down."

Pro-nuclear headlines continue to stack

Nuclear power has experienced a stepchange in sentiment in the last 12-24 months, with positive shifts in favour of nuclear power beginning to accelerate.

countries beginning to embrace nculear energy
Source: UxC Nuclear Power Developments Review (June 2022)

Sidelined spot prices

Uranium spot prices have gone nowhere for almost 12 months, besides a brief rally to US$65/lb in April.

Still, sideways price action isn't necessarily a bad thing amid all the doom and gloom about the global economy and rising interest rates. Energy commodities including oil, gas, coal and uranium have all held up relatively well.

Uranium spot prices
Uranium spot price (Source: TradingEconomics)

Choppy trade

The price action for uranium stocks has been far from smooth sailing. Recent pro-nuclear headlines from Germany, Japan and India inspired a massive re-rate last Wednesday and Thursday.

But broader market volatility, stemming from the more hawkish-than-expected Powell speech at the Jackson Hole Economic Symposium last Friday saw a lot of uranium stocks give back their gains.

Even as they rally on Tuesday, many stocks are fading from intraday highs.

Paladin energy 15 minute chart
Paladin Energy 15 minute chart (Source: TradingView)

 

Written By

Kerry Sun

Content Strategist

Kerry holds a Bachelor of Commerce from Monash University. He is an avid swing trader, focused on technical set ups and breakouts. Outside of writing and trading, Kerry is a big UFC fan, loves poker and training Muay Thai. Connect via LinkedIn or email.

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