Financial Services, Feb. 20 (Editor: Niu Zhanlin) As international uranium prices soar to more than $100 per pound, investment banks Goldman Sachs, Macquarie, and some hedge funds have also stepped in. They are preparing to profit from a new boom in the uranium industry.

According to people familiar with the matter, although most investment banks are still avoiding uranium, Goldman Sachs and Macquarie are increasing physical uranium transactions. In addition, Goldman Sachs has also increased uranium-related options transactions.

At the same time, some hedge funds are also increasing their investments in uranium industry stocks and physical uranium. These signs all indicate that after a decade of downturn, uranium's appeal to financial institutions is beginning to rise.

Currently, in the face of a shortage of supply, the international uranium price has risen to a 16-year high of 103.2 US dollars/pound, but the recent rise has come to a standstill.

Bram Vanderelst, an analyst at trading firm Curzon Uranium, said: “With headlines and generally positive momentum in the nuclear energy industry, hedge funds and other commodity investors are returning to the uranium industry. Many transactions are done through physical funds, which is the easiest way to gain exposure to uranium.”

Earlier this month, Kazatomprom of Kazakhstan, the world's largest producer of uranium, warned that it is difficult for the company to buy sulfuric acid to extract uranium, and production delays are expected at the site of the new mine, so the 2024 production target may be less than 90% of the production permitted under the license.

At the same time, as the world moves away from carbon-emitting fuels, demand for uranium is indeed growing; uranium is used to power nuclear reactors. Bank of America analysts previously wrote in a research report that nuclear energy is quickly regaining recognition as a solution to the two challenges of decarbonization and energy security.

This was further highlighted at the COP28 climate summit in Dubai, when 22 countries signed a commitment to double the installed capacity of nuclear power by 2050.

The International Energy Agency (IEA) predicts that thanks to the significant return of nuclear power, nuclear power generation is expected to reach a record high by 2025. By the end of 2026, nuclear power generation will still increase by an average of about 3% per year, which will also boost uranium demand.

Jefferies analysts Chris Drew and Christopher LaFemina wrote: “These statements reflect a changing attitude towards nuclear energy, and such statements were unlikely to be made in previous years.”

Additionally, Goldman Sachs has begun underwriting physical uranium options for hedge funds, which is also the first time the company has created derivatives for uranium. Goldman Sachs mainly deals with financial clients such as hedge funds. Macquarie's main focus is to increase the trading and marketing output of mining companies.

According to data from consulting firm UxC, physical uranium purchased by investors through publicly traded funds and hedge funds represents nearly 15 million pounds of uranium oxide concentrate (U3O8), accounting for about 26% of the total trading volume in the spot market in 2023. In addition to physical uranium funds, some hedge funds have been investing in shares of uranium miners and other nuclear-related companies in recent years.