Uranium proves resilient in March
Sources: Bloomberg and Sprott Asset Management LP. Data as of March 31, 2023.The U3O8 uranium spot price fell slightly from $50.85 to $50.70 in March and remains up 4.93% year-to-date as of March 31, 2023, showing strength relative to other commodities, which declined 6.47% YTD . Over the longer term, uranium has demonstrated even greater resilience within the commodity space. For the five years ended March 31, 2023, U3O8 spot appreciated a cumulative 140.95%1 compared to 20.62% for the BCOM.
Figure 1. Physical Uranium and Uranium Stocks Have Outperformed Other Asset Classes Over Past Five Years Uranium has demonstrated strong performance within the commodity space. For the five years ended 3/31/2023, the uranium spot price has gained 140.95% versus 20.62% for the broader commodities sector.4 In March, a U.S. banking crisis unfolded amid the Fed's fight against inflation. The collapses of Silicon Valley Bank and Signature Bank, along with the emergency UBS buyout of Credit Suisse, surprised markets.
While the stronger uranium price is encouraging the restart of idle capacity, pricing remains well below the levels required for new greenfield production. In addition, while utilities have contracted to purchase the highest amount of uranium in 10 years, their purchasing activity remains below annual replacement levels.The energy transition movement is structural and we believe nuclear energy is a crucial solution for decarbonizing the global energy supply.
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