Uranium Week: Sharpen Your Bullish Horns

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Brokers re-iterate the sell off in uranium stocks is overdone and positive medium term demand/supply dynamics will support prices

-Another weak week for spot U308 market
-Macro announcements bullish for nuclear energy
-Sector analysts remain upbeat on structural supply deficits

By Danielle Ecuyer

Spot Market Blues

Despite a reprieve from President Trump’s imposition of 25% tariffs on Canadian imports for 30 days last week, spot U3O8 continued to experience ongoing price softness.

Industry consultant TradeTech noted a fall in the offer price of U3O8 below US$70 last Thursday encouraged some buyers to return to the market. The consultants detail a few transactions, including one on Thursday after hours for March delivery to France’s Orano at a price of US$69.50/lb, with three more following in the afternoon.

Another delivery for Orano in France at US$68/lb and two others at US$69.75/lb for 100,000 lbs of U3O8 delivery at ConverDyn’s Metropolis facility (USA) were reported on Friday.

TradeTech’s U3O8 spot price indicator finished the week down -US$2.10/lb to US$69.15, marking a fall of -35.4% since a year earlier when the price reached a 16-year high of US$107/lb.

In the last three months, the spot price has slid by -16.7% and is off -19.9% against the 2024 average price of US$86.29/lb, the consultants note.

TradeTech’s Mid-Term U3O8 price indicator finished at US$76/lb, and the Long-Term price indicator at US$82/lb.

US Energy Policy

The CEO of Liberty Energy, Chris Wright, was confirmed as the new US Energy Secretary on February 4. Wright’s first Secretarial Order has directed the Department of Energy to move America’s focus away from net-zero carbon policies to unlock “American energy production”.

Specifically, Wright was quoted as saying, 

“As global energy demand continues to grow, America must lead the commercialization of affordable and abundant nuclear energy. As such, the Department will work diligently and creatively to enable the rapid deployment and export of next-generation nuclear technology.”

TradeTech also points to a Bloomberg report the new administration is investigating legal parameters around canceling the US$400bn program to finance clean energy technologies.

The consultants believe concern over tariffs is overriding further positive macro news. On February 5, 2025, the National Association of State Energy Officials (NASEO) announced the launch of the Advanced Nuclear First Mover Initiative.

It is a multi-state initiative to accelerate the deployment of advanced nuclear energy projects and is co-chaired by New York, Indiana, Kentucky, Tennessee, and Wyoming, with participation from Maryland, Pennsylvania, Utah, Virginia, and West Virginia.

The initiative aims to encourage public-private partnerships to reduce financial and technological risks, streamline permitting processes, and strengthen supply chain knowledge. The target is to establish a pipeline of projects offering economies of scale and cost efficiencies.

In the UK, Prime Minister Keir Starmer’s Plan for Change incorporates the goal of approving more nuclear plants across England and Wales. Reforms will involve changes to planning rules and pathways for new technologies such as small modular reactors.

Sell-Off Gone Too Far?

Morgan Stanley is one of three brokers who came out to beat the “bullish” drum on the outlook for U3O8 and associated shares.

The broker openly questions, “Is the uranium pullback overdone?” with the risk-reward in 2025 looking more positive.

Looking beyond the pullback in the spot uranium price, down -6% year-to-date, the analysts highlight the narrative around the macro outlook for nuclear energy remains, with Morgan Stanley isolating concerns over the impact of DeepSeek on demand for associated data centers related to AI as “overdone.”

The broker’s US utilities team stresses growth in data center demand, including AI, accounts for only 0.8% of the total expected electricity demand growth of circa 1.8% p.a. between 2025 and 2030.

Morgan Stanley forecasts an average U3O8 spot price of US$86.3/lb in 2025 and US$80/lb in 2026.

Canaccord Genuity takes a deep dive into the uranium market, acknowledging 2024 was a challenging year for investors, with the broker’s uranium stock coverage falling on average -23% over the year, as early-stage developers and explorers bore the brunt of risk-off sentiment.

Large-cap, liquid stocks such as Cameco, Denison Mines, and Uranium Energy achieved a positive return in 2024, with the former the standout, rising 19%.

Turning the page on a disappointing year, Canaccord details what is in store for 2025.

The broker believes the market will increasingly recognise what it views as a structural deficit in the uranium market, with increasing demand expected to underwrite higher prices in both the spot and term U3O8 markets.

Canaccord Genuity retains a long-term price target of US$90/lb.

The recent sell-off in the spot price and uranium stocks, driven by AI concerns for data center demand from DeepSeek and an increase in Kazatomprom’s production update, is viewed as overdone. Notably, AI remains a relatively small factor driving demand for nuclear energy, the analyst emphasizes.

The broker focuses on the growing need for Western supply chains to become more robust due to geopolitical concerns and rising risks, particularly since Russia controls all production of fuel for small modular reactors and Russia and China retain 54% of global enrichment capacity.

Conversations at industry conferences confirmed utilities are increasingly concerned about the conversion market.

While equity prices focus on the U3O8 spot price, Canaccord highlights most uranium is traded on the term market. The analyst stresses investors should focus on the term market price as a better indicator, noting the term price advanced 16% over 2024, finishing the year at a premium of 8.2% to the spot price.

Interestingly, the term price rose despite volumes declining in the term contract market by -33% year-on-year. The analyst believes this suggests the lack of volumes can be attributed to geopolitical tensions, including the US ban on Russian uranium imports and the waiver process.

Canaccord postulates the fuel cycle takes two to three years to complete and it is unlikely contracting volumes will remain below replacement rates.

Supply and Stock Preferences

Regarding supply, the broker observes greenfield projects have not started production despite the uranium price nearing the “incentive price”.

Canaccord continues to forecast a structural deficit between demand and supply of -8Mlbs in 2025 and -10Mlbs in 2026.

Turning to the broker’s preferred stock exposures, Canaccord likes Paladin Energy ((PDN)), Boss Energy ((BOE)), and Deep Yellow ((DYL)) in Australia, maintaining Buy ratings with target prices of $14.90, $5.45, and $1.80, respectively.

Petra Capital stresses the long-term uranium price remains below a supply incentive price level, pointing to Bannerman Energy ((BMN)) and Deep Yellow delaying their final investment decisions into 2025.

Dissecting the market, Petra notes the U3O8 spot price lagged behind conversion and enrichment prices, which finished the year at record levels of US$99.50/kg and US$190/SWU, respectively.

This broker stresses utilities cannot avoid a contracting cycle.

Petra prefers smaller companies, believing they offer the greatest potential upside as projects advance.

The broker is Buy rated on NextGen Energy ((NXG)) with a target price of $14.10 and Aura Energy ((AEE)) with a 36c target price, highlighting both stocks as preferred ASX exposures.

For a deeper dive into the outlook for Uranium, see:

https://fnarena.com/index.php/2024/11/29/uranium-unplugged-nuclear-rebirth-meets-geo-politics/

Uranium companies listed on the ASX:

ASX CODE	DATE	LAST PRICE	WEEKLY % MOVE	52WK HIGH	52WK LOW	P/E	CONSENSUS TARGET	UPSIDE/DOWNSIDE
1AE	07/02/2025	0.0500	-20.00%	$0.17	$0.03
AEE	07/02/2025	0.1300	0.00%	$0.27	$0.11
AGE	07/02/2025	0.0300	– 3.03%	$0.07	$0.03		$0.100	233.3%
AKN	07/02/2025	0.0100	0.00%	$0.04	$0.01
ASN	07/02/2025	0.0600	5.00%	$0.17	$0.05
BKY	07/02/2025	0.3350	-12.99%	$0.45	$0.27
BMN	07/02/2025	3.0100	3.13%	$4.87	$1.90		$7.400	145.8%
BOE	07/02/2025	3.2700	0.00%	$5.99	$2.21	26.4	$3.933	20.3%
BSN	07/02/2025	0.0200	– 5.26%	$0.18	$0.02
C29	07/02/2025	0.0500	0.00%	$0.13	$0.03
CXO	07/02/2025	0.0900	1.14%	$0.26	$0.08		$0.090
CXU	07/02/2025	0.0100	0.00%	$0.05	$0.01
DEV	07/02/2025	0.0800	– 3.53%	$0.45	$0.08
DYL	07/02/2025	1.2800	– 2.27%	$1.83	$0.91	-317.5	$1.850	44.5%
EL8	07/02/2025	0.2800	– 3.57%	$0.62	$0.23
ERA	07/02/2025	0.0030	0.00%	$0.06	$0.00
GLA	07/02/2025	0.0100	0.00%	$0.03	$0.01
GTR	07/02/2025	0.0030	0.00%	$0.01	$0.00
GUE	07/02/2025	0.0800	0.00%	$0.14	$0.05
HAR	07/02/2025	0.0400	0.00%	$0.19	$0.03
I88	07/02/2025	0.6000	– 9.09%	$1.03	$0.14
KOB	07/02/2025	0.0700	0.00%	$0.18	$0.07
LAM	07/02/2025	0.7500	– 3.85%	$1.04	$0.48
LOT	07/02/2025	0.2400	0.00%	$0.49	$0.17		$0.533	122.2%
MEU	07/02/2025	0.0500	-11.67%	$0.06	$0.04
NXG	07/02/2025	10.5600	– 3.36%	$13.66	$7.89		$16.600	57.2%
ORP	07/02/2025	0.0400	0.00%	$0.12	$0.03
PDN	07/02/2025	8.7100	1.52%	$17.98	$6.83	63.4	$11.558	32.7%
PEN	07/02/2025	1.1700	4.59%	$2.70	$1.02		$4.810	311.1%
SLX	07/02/2025	5.9800	1.18%	$6.74	$3.35		$7.200	20.4%
TOE	07/02/2025	0.2000	0.00%	$0.52	$0.19
WCN	07/02/2025	0.0200	0.00%	$0.03	$0.01

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