Uranium ETF: Rising Demand Seen for Uranium

Jun. 2.11 | About: Global X (URA)

Uranium prices plunged after the Japan earthquake and nuclear disaster sidelined nuclear power plant projects. Nevertheless, the uranium-related exchange traded fund (ETF) is still backed by the fundamentals.

The Global X Uranium ETF (NYSEArca: URA) is down sharply year to date.

Uranium prices have dropped 8.7% this year after plummeting almost 27% following the Japanese nuclear crisis in March, reports Moming Zhouh for Bloomberg. However, this trend is set to change as China and India begin a 46% increase in consumption of uranium to fuel five of the world’s largest atomic-power projects.

China’s Nuclear Energy Association has stated that it will increase atomic capacity by eightfold by 2020, and India’s Atomic Energy Commission has commented it will raise its production as much as 13 times by 2030.

“China recognizes they can’t satisfy the growth in electricity demand in a single dimension and they really need a diverse group of sources,” comments Spencer Abraham, a former U.S. energy secretary and current non-executive chairman of Areva SA.

Despite the tragedy in Fukushima, Tokyo, “the overall plan won’t be changed,” says Xu Yuming, vice secretary general of the Nuclear Energy Association. “China faces power shortages and we need to change our energy mix. To resolve these issues, we must develop nuclear.”

With energy concerns growing every year, the nuclear option will likely stay. Amir Adnani, chief executive officer of Corpus Christi, Texas-based Uranium Energy Corp. (UEC), comments that “in the next 20 years, the world’s nuclear capacity is going to double.”

Global X Uranium ETF

Max Chen contributed to this article.