Uranium Week: Structural Bull Cycle Intact

A quiet week in the spot market belies upbeat sentiment

It was quite the week for brokers upgrading their views and forecasts for the uranium sector, against a backdrop of volatility in the U308 spot market according to industry consultant TradeTech.

The spot price slipped -US$1.50/lb to US$84.50/lb after trading as high as US$85.50/lb in the early part of last week.

Participants were noted as closely watching the outcome of a large US utility tender seeking up to 7.2mlbs for delivery between 2027 and 2035.

On Monday, three deals took place for delivery at Orano’s French facility, with another two transactions for delivery of 50klbs of U308 to Orano. No further transactions in the spot market took place over the week.

The TradeTech Mid-Term price indicator stands at US$90/lb and the Long-Term price indicator at US$93/lb.

The consultants also highlighted the all-stock merger between US utility NextEra Energy and Dominion Energy, thereby creating the world’s largest electric utility business. The deal is valued at US$67bn.

Morgans initiates coverage on the U308 sector

Morgans is the latest Australian broker to initiate coverage on the uranium sector with a blockbuster eighty-eight-page report.

The broker believes U308 has entered what it describes as a “structurally constrained market” underpinned by long-term supply shortages.

The challenges are being emphasised by an acceleration in demand from nuclear reactors, including a push for net zero emissions energy production, concerns around energy security in a more geopolitically fractured world, as well as accelerating demand from AI-related energy needs from hyperscalers and data centres.

Unlike previous cycles, this one is considered different because there are structural supply deficits rather than temporary supply disruptions or speculative demand.

Factors resulting in the demand push include more than twenty countries pledging at COP28 to triple nuclear capacity by 2050. China has 39 reactors under construction and is aiming for 110GW of nuclear capacity by 2030.

The US is targeting 400GW of nuclear capacity by 2050, compared to 100GW currently. France has removed its long-standing cap on nuclear generation, committing to new large-scale reactors.

Meanwhile, India is looking to grow its nuclear capacity to 100GW by 2047 from 8.8GW currently after opening up the sector to private investment.

Morgans also sees AI and hyperscale data centres as a major new uranium demand driver because nuclear is one of few scalable sources of reliable, zero-carbon baseload power.

Microsoft, Amazon, Google and Meta are all signing multi-decade nuclear power agreements or funding SMR development to support AI infrastructure growth.

Hyperscaler capex is expected to reach US$755bn in 2026 according to Goldman Sachs, up 83% on 2025. The underlying assets are energy hungry.

From a supply-side perspective, Morgans identifies the uranium industry as having suffered from chronic underinvestment following the Fukushima disaster, which pushed prices to uneconomic levels for years, particularly preventing new investment.

Major mines were shut or suspended, including Cameco’s McArthur River and Paladin Energy’s ((PDN)) Langer Heinrich. Kazakhstan, which supplies around 40% of global uranium production, has repeatedly downgraded output due to sulphuric acid shortages and well depletion.

With Russia controlling 40%-50% of global uranium enrichment capacity, the broker argues there is a scarcity of Western-friendly uranium supply, creating a major geopolitical risk for Western utilities after the Ukraine invasion.

Bringing new supply on stream is neither quick nor cheap, with mine development lead times of 7-15 years, meaning meaningful new supply cannot arrive quickly even with higher prices.

Taking a deeper dive into demand, Morgans points to utilities having contracted just 589Mlb of U3O8 over the past five years while reactors consumed around 815Mlb, creating a -226Mlb contracting deficit.

This uncovered demand will eventually need to be contracted, tightening the market further.

Morgans forecasts annual U308 demand rising to 83,840t by 2030 from 65,650t in 2023 and around 130,000t by 2040.

Nuclear fuel costs only represent around 10%-15% of reactor operating costs, meaning utilities are relatively insensitive to uranium price increases and prioritise security of supply.

In April, long-term uranium contract prices reached US$91.50/lb, a 14-year high which underscores the “real story” for Morgans. Utilities are increasingly looking to lock in future supply despite softer U308 prices.

Morgans forecasts uranium spot prices recovering to around US$100/lb by FY29 and expects prices to rise further to US$105-US$110/lb through FY31-FY34 as supply deficits deepen.

From FY35, the broker expects uranium prices reaching US$115/lb and ultimately US$130/lb by FY41.

U308 prices below US$80/lb would make a significant portion of future mine supply uneconomic, creating a structural floor under the market.

Let's get stock specific

Turning to individual stocks, Paladin Energy ((PDN)) is Buy rated with a $13.05 target and is considered as offering an attractive entry point for investors into Morgans' “uranium bull cycle”.