Something big happened at the 2023 World Nuclear Symposium in the eyes of attendees.
Below are three major takeaways that may explain what is yet to come for uranium investors…
Uranium stocks across global markets surged higher this week, as several analysts and investment fund managers left a major nuclear energy conference buzzing.
The annual World Nuclear Symposium in London is a major focal point for the industry.
The conference attracts thousands of industry stakeholders from around the world, across investment funds, mining companies, financial analysts and Journalists. By all accounts, attendees walked away with a sense that something major was about to play out in the sector.
The reality of Supply/Demand Imbalance Hits Attendees
For those not at the conference, the sense of what was to come started with words from Dustin Garrow, Managing Principle of Nuclear Fuel Associates LLC, when speaking to Crux Investor.
In the interview, Garrow said a surprising thing. He said, there was a mood that was “sombre” from the uranium miners – who have spent years talking about supplying the market.
Now, those players realise they’re going to have to actually act on those promises – from pounds in the ground to market – as fundamental demand from nuclear build-outs and startups arrives. The world is suddenly very hungry for enriched uranium.
“We’ve come to the end where the existing mobile inventory is at significantly lower levels,” he said.
Garrow spoke of uranium miners who had to shift their business model from pounds in the ground to decisive action, after many years of a uranium bear.
“Now it’s the time, the light has gone green… where you have to go to your board to say you need (hundreds) of millions of dollars and contractors,” he said.
The nuclear energy utilities are out contracting and are having to be careful to sign up with reliable, long-term partners.
“The utilities are starting to realise this… who is it that is committed to doing this,” he said.
“The sustainability of the projects (is vital) to the utilities,” he said.
Garrow also suggested that the conference concluded that global nuclear energy capacity will probably need to be tripled by 2050 to meet net-zero climate goals, which is a much higher target than even the IEA is suggesting.
There was also news that a new physical Uranium fund in the market, based in Singapore, with access to US$500 million to kickstart buying, he alluded to in the interview.
The Cantor Fitzgerald Note
A day later, US investment firm Cantor Fitzgerald published a note to investors stating that the conference had convinced their analysts that uranium could easily ‘gap up’ on major players entering the industry.
The firm attended investor meetings around the conference and in recent days.
The team assessed that a fundamental demand is coming from hungry utilities, looking to secure long-term supply deals.
The bull case is very strong, with nuclear power capacity only increasing globally. For example, Japan is undertaking major nuclear restarts, the US is adding new capacity and China building massive new plants at a rapid pace.
The firm also noted that while the 2005-2007 uranium bull was driven by speculation primarily from hedge funds, the current picture is driven squarely by fundamental end-users.
The analysts suggest a much more sustainable, healthy and broad-based rally may be ahead.
“In the event, a buyer was to show up looking for ~1MMlb, the order probably takes 3-4 weeks to fill and gaps the price up by $10/lb,” the analysts said in a note.
The firm also said that up to 5 utilities are looking to enter the market in the coming two to three months in order to fulfil the coming demand. (See the global nuclear energy demand picture).
“4-5 different utilities are expected to go out with RFPs (requests for proposals) for term contracts in the 2025 – 2030 period for ~5 MMlb U308, each.”
Kuppy’s Big Short Uranium Analysis
Then, this week, Praetorian Capital Fund manager Harris Kupperman wrote an entertaining and stunning note to investors on how he felt after attending the World Nuclear Symposium.
“I think that there will be a super-spike in the uranium price. Not a doubling or a tripling, but a true super-spike that will stun everyone,” he wrote.
“As I roamed around the World Nuclear Association (WNA) conference in London. It felt like I was attending The Bigger Short Conference,” he noted, in comparison to a famous scene in the hit movie about the Global Financial Crisis.
“Just like there had never been a nationwide housing crash during the era of securitizations, there had never been a structural deficit in the lives of these attendees. Since it hadn’t happened before, no one had thought through the ultimate ramifications. In fact, most of the attendees were functionally short uranium, and getting shorter by consuming inventories, lending inventories or even selling down inventories. Meanwhile, those with contract coverage had never even considered the counter-party risks entailed with doing business in funny countries with transport limitations.”
⚡️"The Bigger Short" - @Hkuppy's Praetorian Capital looks at how industry guys at the World #Nuclear Association's London symposium "seemed oblivious to the potential squeeze on [#Uranium] supply"😴⚛️⛏️🗜️🤠🐂 A great read!🧐 https://t.co/C7xgZn8FzM
— John Quakes (@quakes99) September 13, 2023
Price of Uranium Surges
Since the conference, as of writing, the price of uranium has surged.
On Wednesday, September 13, the price of uranium hit a new 12-year high of $64.00/lb, according to data provided by Evolution Markets.
We’ve seen significant media coverage, including articles in the WSJ (Nukes are Back, Uranium in Short Supply) and Financial Times + significant macro newsflow for the sector, including nuclear restarts, build-outs and more major news you can find in our nuclear energy section.
Could the massive bull run and gap-up finally be here? One thing is for sure, uranium investors have never been more optimistic about the future.
