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You’re probably well aware that uranium has become the new lithium, in terms of hype – and ASX uranium stocks are showing it.
Investors have been pouring into ASX uranium stocks with increasing gusto since late last year.
However, today, the top 7 biggest losers on the share market as at 1.30pm AEDT are all uranium companies.
Just take a look at the below:
- Boss Energy (ASX:BOE) down 13.27%
- Deep Yellow (ASX:DYL) down 12.39%
- Bannerman Energy (ASX:BMN) down 10.38%
- SILEX Systems (ASX:SLX) down 9.08%
- Alligator Energy (ASX:AGE) down 8.86%
- Paladin Energy (ASX:PDN) down 8.25%
- Peninsula Energy (ASX:PEN) down 6.90%
All correct as at 1.30pm AEDT Friday
So what’s going on?
Supply story shaken
Beyond the general government enthusiasm for nuclear energy uptake fuelling this latest uranium rally, the bull run uranium has enjoyed in 2024 is a supply side story.
Or, it was.
(Prices were also driven up by the perhaps overly-influential US “Russian uranium ban” which actually allows the US to import Russian nuclear fuel until 2028.)
When Kazakhstani company Kazatomprom issued guidance earlier this year it would be restricted in its capacity to produce nameplate volumes of uranium, the market went wild.
Kazatomprom calls itself the world leading uranium producer and states that one fifth of global supply comes from itself.
So when it looked like there was going to be output problems, the bulls heard “money.”
This helped push uranium prices to USD$106.50/lb on the NYMEX, a record high and – if you ignore the anomalous spike between 2006-2007 – an all time high (as far as records go.)
However, that situation looks like it’s about to change.
One word: Cameco
But Kazatomprom isn’t the only major supplier the world looks at.
There’s also Canada’s Cameco, which mines uranium from McArthur River and other assets in North America.
Cameco’s market cap, for context of scale, is US$19 billion.
And Cameco has posted impressive results overnight – uranium production from the major was doubled on 2023; and the company swung to profitability in the most recent reported quarter.
But why ASX uranium stocks are falling?
Cameco has said it wants to boost production. And it’s quite serious about that.
Cameco has a plan to produce up to 43 million pounds of uranium from its McArthur River/Key Lake project – that’s made up of an 18M pound target for this year, and, an expansion of capacity to 25M pounds on site “when the time is right.”
That last caveat could be a hint the company is waiting to see if prices stay high after it produces 18Mlbs this year.
Whether or not that happens remains to be seen.
As of 1.30pm AEDT; prices on TradingEconomics still reflect US$106.00/lb.
