Uranium Cycle in Third Inning, Key Market Drivers for 2023


2022 brought a slew of positive news for the uranium sector, but the year was still frustrating for investors.

Speaking to the Investing News Network, Justin Huhn, founder and publisher of Uranium Insider, said the U3O8 spot price only rose about 13 percent last year, while in some cases uranium equities are trading 30 to 35 percent below their high points.

“Even though the fundamental case improved throughout the year, and so many elements of positive news supporting the fundamental case continued to pour in … the spot price continued to just languish. That affected sentiment, and sentiment and liquidity drive markets, especially in the short term,” he explained during the conversation.

In his view, the uranium bull market is now in its third inning after initially taking off in December 2020 and then reaching inning one or two in 2021 as the debut of the Sprott Physical Uranium Trust (TSX:U.UN) boosted momentum.

“We’re probably somewhere on the tail end of inning three,” he said. “I think we’ve got a long ways to go, and in these types of markets the mania phase usually happens in inning eight and nine. So there’s a lot of excitement ahead of us still.”

Volatility will come with that excitement. Huhn has a positive long-term uranium outlook, but he emphasized that the path forward will include major ups and downs. He cautioned that those who want to move in and out of the market will have to be precise with their trades, while investors who are in it for the long haul will have to tolerate 30 percent drawdowns once a year or so.

Looking forward to what 2023 may bring for uranium, Huhn pointed out that while the U3O8 spot price is lower than many market participants would like, prices at every other stage of nuclear fuel cycle are up much more. This is typical, and with higher prices already filtering into the term market, an increase in the spot price is next in line.

“The case for a much higher uranium price is ultra clear based on the fundamentals of the sector. Then we have this other thing, which is risk-on markets and the SPUT vehicle,” he said, noting that risk-off sentiment is currently hindering the Sprott trust. “If (the Sprott trust starts buying) in conjunction with utilities sending up the term price and the traders pulling on spot and competing with SPUT in the spot market, all bets are off on where it could go.”

Watch the interview above for more from Huhn, including uranium supply and demand, plus the overall nuclear fuel cycle.

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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.

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