Analysts at Alpine Macro and BCA Research are bullish on uranium, with Alpine calling a "super-cycle bull market" for uranium.
The firm cited a global shift back towards nuclear energy. Their note highlights the challenges the industry faced after Fukushima, with widespread reactor closures and depressed prices. However, they argue that a perfect storm of factors is now propelling uranium into a new era.
Firstly, they highlight the need for clean energy with reliable baseload generation has become paramount. Nuclear's ability to deliver on both fronts, along with its minimal land footprint and safety record compared to fossil fuels, positions it as a critical tool in the fight against climate change.
Secondly, Alpine says uranium supply is struggling to keep pace with resurgent demand. Following years of underinvestment and mine closures, the industry is facing a structural supply deficit.
The firm explains that this is further exacerbated by the rapid expansion of the global nuclear reactor fleet, with China alone planning to add 150 new reactors by 2040. Additionally, reactor life extensions, restarts of idled facilities, and the potential of small modular reactors all contribute to the growing uranium demand picture.
Alpine Macro also points to a shift in public sentiment, with record-high levels of American support for nuclear energy. They emphasize the inelastic nature of uranium demand – nuclear operators prioritize having enough fuel on hand over short-term price fluctuations.
With uranium prices still well below historical highs, Alpine Macro believes the rally is just beginning. They see significant upside potential for uranium stocks as the nuclear renaissance unfolds.
Meanwhile, analysts at BCA state that the uranium bull market is "climbing a wall of doubt," with the underlying supply-demand fundamentals "far stronger than those during the 2000s bull market."
In fact, they "might actually be the strongest ever," claims BCA. They note that so far, the rally in uranium prices has been mainly supported by the demand story and the positive momentum built by the nuclear industry.
However, the investment research firm says the often-overlooked structural supply deficit will be the main source of fuel for the emerging bull market in the near to medium term.
"Overfeeding from uranium enrichers and the start of a new multi-year contracting cycle from utility companies add upward pressure on uranium prices," adds BCA.
They conclude: "No matter how you look at it, both the math and the narrative are incredibly bullish for uranium. The recent pullback in uranium prices from their February peak of $107 should be viewed as a period of consolidation after a doubling of uranium spot prices in six months."
Overall, BCA argues that "the bull market is intact and can run much further."