Day traders are pushing up uranium prices

After Japan and Germany shut down nuclear reactors for a decade after the Fukushima disaster, uranium prices have soared to $47 a pound from $32.25 in early August. According to price-tracker UxC LLC, they remain below their peak of $137 in 2007.

US-listed shares of Canadian uranium giant Cameco Corp are up more than 20% in October and nearly doubled in 2021. Fellow Canadian miner Denison Mines Corp is up 27% this month and nearly tripled this year. Texas-based Uranium Energy Corp. has climbed more than 14% in October.

Behind the rally: A rally in uranium prices driven by individual traders who have come to a new trust that offers a cheap and easy way to bet on the nuclear-fuel market. The Toronto-listed trust, operated by Sprout Asset Management LP, has twice raised fresh cash and siphoned uranium from shareholders since the summer. Its shares have climbed to $12.49, up 49% from its inception in July.

The purchase of Sprot is helping to eliminate the accumulation of uranium after the 2011 Fukushima disaster. Traders say there is little or no justification for prices from stop-and-start purchases by the trust, such as supply from mines or demand for utilities with little or no justification.

Uranium shares rose further on Monday after Kazakh state-backed miner Kazatomprom, the world’s largest producer, launched its own uranium fund in partnership with Kazakhstan’s central bank and Genchi Global Ltd, an Emirati investment firm. The fund will start at $50 million and plans to raise up to $500 million from institutional or private investors.

“This is clearly another new way to remove material from the spot market. It helps clear any remaining overhangs of supply,” said UXC president Jonathan Hinz.

But Mr. Hinze said Kazatomprom’s funds are unlikely to have the same bullish effect on uranium prices as the Sprott Trust. Sprott launched its second share offering on September 10 for up to $1 billion and owns more than $1.6 billion worth of uranium.

The volatility in uranium prices is echoed in stocks including AMC Entertainment Holdings Inc. and GameStop Corp., which attracted enthusiastic followings among individual day traders gathering on Reddit.

Even more so than struggling videogame stores and movie-theater chains, uranium isn’t a likely candidate to be jolted by a flurry of individual merchants’ money. Utilities, miners, specialist traders and hedge funds and a group of banks including Goldman Sachs Group Inc. have long dominated the market.

Most U3O8, a form of lightly processed uranium yet to be enriched and made into fuel rods, is sold in long-term deals. Futures rarely change hands.

The sleeping market has gained momentum. Traders estimate that there will be a turnover of 70 million to 90 million pounds in 2021, up from 50 million in a typical year.

Shares of Yellow Cake Plc, the third investment vehicle for physical uranium, have jumped 54% this year in London. The fund has said it expects to take delivery of 2 million pounds of uranium from Kazatomprom between October and December, bringing its total holdings to about £16 million.

“We’ve never seen this before in the uranium market,” Uranium Energy CEO Amir Adnani said of the Kazakh and Sprot funding. “Long term, it has to be faster.”

Mr Adnani said the higher prices are a welcome development for miners who have struggled with surplus uranium for years, but the volatility in prices will prompt most to go back on plans to dig more. “Let’s see where the dust settles,” he said.

This story has been published without modification to the text from a wire agency feed