URA - URA: Uranium Glut Should Return By 2025 Unless Geopolitical Crisis Grows

2024-06-10 20:52:01 ET

Summary

• Uranium miners face an elastic supply curve, with North American output likely to rise significantly as uranium nears $90/lb.
• Following Cameco's renewed production and restarted US mines, I expect uranium supply will rise above demand by year-end.
• Since building nuclear power plants takes over a decade, global uranium demand is unlikely to rise faster than 1% annually for the coming decade or two.
• I would avoid the ETF URA today, as most miners will earn no profits with uranium below $100/lb, but could face losses by ramping up production into another glut.
• URA may become a buying opportunity should Kazakhstan's uranium imports become threatened, likely resulting from its military ties to Russia.

Uranium stocks are unique within the energy industry because they face economic fundamentals that are vastly different from others. Further, the North American uranium mining industry is prone to immense speculation from retail investors, as the sector is generally unprofitable (particularly in the US). Most global uranium supplies come from Kazakhstan through dominant firms like Cameco ( CCJ )....

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