Uranium miners lead ASX energy rally
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The news: Uranium miners led a rally by energy stocks on the ASX as RBC Capital Markets said it expects global uranium requirements to grow by more than 50% by 2040.
The numbers: Energy was the best performing sector on the ASX by 1:40pm AEDT, rising 2.95% as the wider market added 1%.
Uranium heavyweights Deep Yellow (8.2%), Paladin Energy (6.5%) and Boss Energy (5.6%) made up three of the top five performing companies across the ASX 200.
Coal majors Yancoal (6.3%) and Whitehaven Coal (4.3%) also gained while oil supply risks triggered by increased tensions in the Russia-Ukraine war pushed oil and gas companies Karoon Energy (4.6%), Woodside Energy (2.8%), Santos (2.3%), Ampol (1.6%) and Beach Energy (1.4%) higher.
The context: RBC analyst Andrew Wong said that uranium is currently in short supply as the world re-embraces nuclear energy to meet rising demand for clean electricity.
He noted that increased supply into the early 2030s will "only just" be enough to cover uranium forecasted needs and comes with "significant execution risk".
Into the mid-2030s, RBC sees a "significant uranium deficit" forming due to resource depletion, with projected supply covering just 80% of demand. Given significant tailwinds in nuclear energy, RBC also forecasts a realistic upside demand scenario that would require nearly every advanced uranium project in development to come online.
Wong said uranium prices are set to remain elevated for the next decade, with RBC forecasting average uranium prices of USD90 ($138) per pound between 2025 and 2028, compared to USD80 to $85 per pound today.
The source: RBC Capital Markets research
