The Global X Uranium ETF (NYSEArca: URA), which tracks uranium miners, has stumbled for several years and over that time, there has been no shortage of uranium market observers voicing bullish opinions on the commodity.
Uranium remains controversial even five years after the 2011 Fukushima disaster in Japan. In response to the fallout, anti-nuclear activists have aggressively petitioned courts to block restarting the plants. Japanese Prime Minister Shinzo Abe has also been a vocal nuclear power proponent, arguing that atomic power, which generated almost one-third of Japan’s electricity pre-Fukushima, helps diminish the country’s reliance on expensive fossil fuel imports.
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There are fundamental factors that favor an eventual rebound in uranium stocks.
“Countries like Japan, Germany and a host of other nations dreaming of giving up on Nuclear energy are well just dreaming. Japan is now re-embracing nuclear, as will Germany and or any other country with hopes to wean itself away from Nuclear power. It is either Nuclear power or Coal, and since these countries claim to be fighting global warming, they will rather embrace Nuclear than coal,” according to Mining.com.
[related_stories]Another often cited catalyst by uranium bulls is emerging markets demand.
“In 2013, nuclear power contributed around 5% of the world’s total energy supply, and is a major source of energy in developed markets like Europe (26%) and the US (20%). According to analysts, nuclear power output is expected to grow faster over the next five years than over the last 20 years. This demand is largely being driven by emerging markets which have massive electricity needs, but are struggling with air pollution issues, like China and India,” according to Global X research.
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With nuclear energy industry looking brighter, uranium demand is expected to rise. According to the World Nuclear Association, the number of new nuclear plants due to go online this year and in the next three years is expected to total around 40, and more are planned in the years ahead, mostly in Asia, writes Lawrence Williams for Mineweb.
“Overall while there are many factors in the fundamental arena calling for a bottom, the technical and psychological patterns offer opposing viewpoints; both suggest that uranium is likely to test the $22 ranges before a long-term base in is in place. As the sector has taken a massive beating since it peaked in 2007, it would be a good idea to keep this sector on your radar and possibly start looking at some stocks in the industry,” adds Mining.com.
Global X Uranium ETF
