MW Uranium ETF soars to 10-year high on rising demand and Russia import ban
By Isabel Wang
In 2022, Russia was the third-largest provider of uranium to the U.S., after Canada and Kazakhstan
Exchange-traded funds that track uranium-related stocks have skyrocketed this year, with prices for the heavy metal widely used for nuclear-power generation hovering around its highest level in 16 years, buoyed by tight supplies and expectations for rising demand.
On Tuesday, the largest uranium-focused fund, the Global X Uranium ETF URA, with over $3 billion under management, was on track to end at its highest level since April 2014. The fund was up for six consecutive trading sessions, on pace to log its longest winning streak in over a year, according to Dow Jones Market Data.
The Sprott Uranium Miners ETF URNM, which has nearly $2 billion under management, on Tuesday was on pace to end at its all-time high since its launch in 2019, according to FactSet data.
Spot uranium prices rallied early this year, doubling in price since last summer to a 52-week high of $106.40 per pound in February before dipping to just above $90 on Monday afternoon, according to FactSet data.
President Joe Biden last week signed legislation limiting the import of Russian uranium into the United States while unlocking some $2.7 billion in spending, previously approved by Congress, to build up domestic uranium supplies for domestic nuclear plants.
In 2022, Russia was the third-largest provider of uranium to the U.S., after Canada and Kazakhstan, according to the Energy Information Administration. That year, 12% of total U.S. purchases of uranium came from Russia.
MarketWatch reported earlier this month that a ban on U.S. imports of Russian uranium is set to shake up the nuclear-energy market and could lift prices back above $100 a pound for the nuclear fuel, which has seen tight supply.
Neena Mishra, director of ETF research at Zacks Investment Management, said the boom in artificial intelligence has also driven a surging demand for nuclear energy to provide data-center capacity to handle AI workloads and store the vast amount of data required.
"Many tech giants have pledged to use renewable energy to power their data centers, driven by sustainability goals, and they are increasingly exploring nuclear energy for their power needs," Mishra said in a Friday note.
Now read: Uranium prices are still 'nowhere near the peak of the last cycle': Here's why nuclear energy ETFs could power your portfolio
Uranium is mainly used in nuclear plants, which generate electricity without producing direct emissions of carbon dioxide. However, nuclear energy only provides about 10% of the world's electricity, from a total of about 440 reactors. The U.S. now has 94 operable nuclear reactors, according to the World Nuclear Association.
U.S. stocks were edging higher on Tuesday afternoon, with the Dow Jones Industrial Average DJIA and the S&P 500 SPX each rising 0.1%, and the Nasdaq Composite COMP up less than 0.1%, according to FactSet data.
-Isabel Wang
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May 21, 2024 15:05 ET (19:05 GMT)
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