Uranium has had a stellar run over the past year, but if Berenberg is right, the story is far from over.
The bank argues that the market is entering a “new phase” as years of underinvestment collide with a global push for energy security and decarbonisation.
Prices have already climbed more than 80% in the past 12 months, yet Berenberg expects them to reach $110 per pound this year, up from around $89 today.
That optimism rests on a fairly simple point: the world needs more uranium than it’s producing. Berenberg estimates the market will stay in structural deficit until at least 2029, even when factoring in secondary supply like government stockpiles or recycled material.
Cycle still in its early stages
The current contracting cycle is still in the early stages, the analysts note, suggesting utilities will have to pay up as they scramble to lock in long-term supply.
While Kazatomprom and Cameco Corporation (TSX:CCO) remain Berenberg’s top picks among the big miners, there’s also interest in the developer, companies like NexGen Energy and Denison Mines Corp (TSX:DML), both of which are working on what Berenberg describes as “sector-leading assets”.
But for UK-based investors, the simplest route might be Yellow Cake PLC (AIM:YCA). The London-listed company buys and holds physical uranium and trades at a discount to the value of its holdings.
According to Berenberg, it offers “low-risk, direct exposure to the uranium price” and benefits from a longstanding agreement with Kazatomprom, giving it access to a reliable supply in a tight market.
There are always risks. Delays to new nuclear buildouts or a resurgence of secondary supply could put a lid on prices.
Digging deeper
But Berenberg’s view is that the bigger danger now is being too cautious. Sentiment towards nuclear energy has shifted decisively, and with utilities still under-contracted, any further supply-side hiccups could spark another leg up in the market.
In other words, this marks the start of a new era in uranium contracting dynamics.
For those looking to tap into that theme, Yellow Cake, according to Berenberg, stands out as a practical option on the UK market, while more adventurous investors might look further up the risk curve towards the developers.
Either way, the case for uranium is no longer just about recovery; it’s about what comes next.