For what seems like the fifth or sixth year in a row, the uranium market has managed to make fools of those of us calling for a new bull market.
I’m new to the club but guilty as charged… so far.
Those of you who have been fortunate enough to have made money from the last bull market know the script. You can be off by years on when the actual bull starts charging, but when it does, the amount of money made has always been worth it.
Quadruple-digit gains are not only attainable, they are expected.
Despite the multiple head fakes, I’m sticking to my call that the time to be positioned in quality uranium names is now.
The World Nuclear Association (WNA) — the go-to source for nuclear industry information — recently released its Nuclear Fuel Report and it was optimistic and backed up with a lot of data.
Let’s go over some of the numbers.
The World Nuclear Association estimates global nuclear power capacities to grow through 2040 at a faster rate than at any time since 1990.
Uranium projections are up in all scenarios (for the first time in eight years), including 49% base case growth.
Mine production and uranium requirements were 139 million pounds and 174.8 million pounds U308 in 2018.
Demand is set to grow to 195.7 million pounds by 2025, 220.6 million pounds by 2030, 247.9 million pounds by 2035, and 260 million pounds by 2040.
In the short term we know that Cameco will be buying upwards of 12 million pounds.
That is a clear trend that is easy to get behind.
On the supply side, secondary supplies are expected to decrease from 15% to 4.5% by 2040.
Three of the top ten uranium mines representing 10% of 2018 production are scheduled to close before 2030.
Domestically, the U.S. depends on foreign uranium, which accounts for 98% of the uranium used in U.S. nuclear reactors.
Russia, Kazakhstan, and Uzbekistan together account for a combined 40% of all uranium imported into the United States.
The most predictable (what could go wrong, right?) near-term catalyst is the report due from Trump’s Nuclear Fuel Working Group.
After kicking the can down the road, Trump is asking the group to identify ways to boost the domestic uranium industry. The recommendations for President Trump from the Nuclear Fuel Working Group (NFWG) are due by October 10, just a few days from now.
The Nuclear Energy Institute (NEI), an industry trade association, wrote a letter on Aug 20 to former National Security Adviser John Bolton and Director of the National Economic Council Larry Kudlow.
In that letter, the NEI asked the president to use his authority under the Defense Production Act to spur more uranium production and create more nuclear energy infrastructure.
Whether it’s tax breaks, quotas, tariffs on uranium imports, or a combination of all of the above, it is clear there is a need for decisive action that helps revitalize the U.S. uranium supply chain.
It is also clear that a decision favorable to companies with U.S. uranium exposure will prove beneficial to the overall sector as there will finally be some clarity moving forward.
Clarity that forces the utilities to step back in and allows those of us calling for a raging uranium bull market to have the last laugh.
To your wealth,
Source: The Outsider Club