Big gains in short time frames can be seductive. Just look at the Global X Uranium ETF (NYSEArca: URA), which tracks uranium miners. The go-to uranium ETF is up nearly 16% over the past month, but some market observers believe the uranium and nuclear industries do not have a friend in the Trump Administration.
Earlier this year, uranium prices saw temporary relief after U.S. and five other permanent United Nations Security Council members backed plans for Iran to receive a 116 metric tons of natural uranium, with a huge shipment of natural uranium from Russia.
Another ETF for accessing the nuclear trade is the VanEck Vectors Uranium+Nuclear Energy ETF (NYSEArca: NLR), which takes a broader approach, including exposure to large and more stable utilities.
An executive order from President Trump “directs the EPA, among other things, to review the previous administration’s “Clean Power Plan”. There are two main parts to the CPP with respect to electric power generators: 1) carbon pollution emissions guidelines for both new and existing generation and 2) federal efforts to measure the social costs of carbon (SC-CO2) as well as nitrous oxide and methane. It is the latter that concerns us here,” reports OilPrice.com.
Uranium remains controversial even six 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.
“Two states, New York and Illinois, have recently taken steps to subsidize aging nuclear generating stations. Both states used a variant of the SC-CO2 concept to justify above market payments to these base load power stations. The states’ rationale was simple. This subsidy was not related to either capacity or energy production. Rather it was an indirect payment for power produced with certain environmental attributes, in this case, low carbon emissions,” according to OilPrice.com.
Spot uranium prices ticked higher earlier this month, but the long-term trend for the commodity has been mostly bearish. Supply should be falling, though. Earlier this year, the Department of Energy announced reductions to uranium dispersals and some major uranium-producing countries have pared output.
For more articles on uranium ETFs, visit our Uranium category.