The resurgence of the epidemic around the world has delayed the effective resolution of the supply chain crisis, followed by a sharp rise in commodity prices. In addition to the soaring prices of metals such as copper and aluminum, the prices of traditional energy sources such as coal, oil and natural gas have also risen rapidly.

At the same time, the price of uranium, an important fuel for nuclear power, has reversed from a decade-long downturn and has risen to its highest level since 2014.

Photo: the official website of Cameco, the world's largest listed uranium trading company.

CME Group Inc's uranium futures price is now at $42.40 per pound.

Photo source: Yingwei Finance and Economics

In addition, the United States uranium ETF, the global uranium mining index also ushered in the largest inflow in history.

Trust funds swept into the spot crazily

The strong rise in uranium prices is closely linked to a physical trust that sweeps stocks in the spot market and is a closed-end fund set up by Sprott, a Canadian precious metals asset investment company.

According to public data, the total spot volume of uranium in 2020 was 92.2 million pounds, of which up to 85 per cent was purchased by public power plants through long-term contracts. Since its inception, the fund has been on a buying spree of physical uranium in the market.

For example, the fund bought 850000 pounds of solid uranium on Sept. 8 alone.

With the recent surge in uranium prices, more and more funds have been attracted to this market.

Since the trust fund was launched on July 19, Sprott has bought about 24.91 million pounds of uranium trioxide and 300000 pounds of uranium hexafluoride, with a total value of $1.08 billion, helping the price of uranium rise from $30 at the beginning of the year to more than $40 a pound, according to Sprott's website.

As of September 10, the fund had a net asset value of US $1.087 billion, an increase of 29.91% since its inception, making it the world's first and largest physical uranium fund.

Source: Sprott official website

Sprott said in its investment statement that the imbalance between production and demand for uranium may intensify in the future, and a new bull market for uranium may be emerging.

Canaccord Genuity, a financial services company, said the Sprott uranium fund, currently listed on the Toronto Stock Exchange, could be listed on the New York Stock Exchange next year, which could further spur a rise in uranium prices.

Renewed attention to nuclear power under the trend of carbon neutralization

Against a backdrop of accelerating global carbon neutralization, investors are betting that nuclear power will be the key to getting rid of fossil fuels in the future, and the lack of new uranium is bound to mean higher prices.

Uranium demand is expected to climb from about 162 million pounds this year to 206 million pounds in 2030 and even further to 292 million pounds in 2040, according to the World Nuclear Association. At the same time, due to the lack of investment in new mines, uranium supply is expected to fall by 15 per cent by 2025 and 50 per cent by 2030.

In addition, in terms of the current proportion of nuclear power in the total power structure, it still has great potential for development.

According to the data of the World Nuclear Association, as of June 30, 2021, 32 countries in the world are using nuclear power, with a total of 443 nuclear power units in operation, with a total installed capacity of about 394.282 million kilowatts, accounting for about 5.3% of the total installed power capacity in the world. The total global nuclear power generation is 2.553 trillion kilowatt-hours, accounting for about 10 per cent of the power structure. Only a few developed countries account for a relatively high proportion of nuclear power, such as 70.6% in France and 19.7% in the United States.

Japan's administrative reform minister Taro Wono and Prime Minister Yoshiwei Suga said on Wednesday that Japan needs to restart nuclear power plants if it is to achieve its goal of carbon neutrality by 2050. Fumio Kishida, Japan's main contender for the next prime minister, also said it was necessary to restart nuclear power plants in order to meet the country's net zero emissions target.

Japan's nuclear power plant, which was shut down after the Fukushima Daiichi disaster in 2011, is slowly recovering.

It is important to note that once Japan restarts nuclear power plants, uranium demand will double, and uranium production is likely to increase accordingly, returning to the levels seen before the 2011 Fukushima accident.

Uranium and nuclear energy stocks rose.

With the soaring price of uranium, individual stock funds of uranium mining and nuclear power have also risen one after another.

Cameco, the world's largest listed uranium company by market capitalisation by output, has risen more than 80 per cent since the start of the year.

Shares of Japanese utility companies also rose sharply after Japanese officials announced that they might restart nuclear power plants.

Global X Uranium ETF, the largest ETF fund in the field of natural uranium, is up 70 per cent year-to-date.

In addition, Hong Kong stocks Zhongguang Nuclear Mining and CGN Power Co.,Ltd. have also become the targets of many funds, with their share prices up about 30 per cent and 60 per cent respectively from their recent lows.