While the market was losing its mind over silver’s parabolic move and a subsequent crash, uranium has quietly crossed over $100 per pound. The key nuclear fuel ingredient hit its highest price in over 2 years before pulling back.
Sprott Inc. (NYSE:SII) report shows the key drivers behind the rally. These include tightening fundamentals, improving policy clarity, and a growing recognition of supply risks across the global market.
Policy at the Center
Policy support remains a key market catalyst, as Sprott points to the U.S. Section 232 framework on critical minerals. This proclamation categorizes uranium as essential to national security and energy resilience. It cites heavy reliance on foreign supply chains and limited domestic production.
Section 232 allows the U.S. government to pursue trade adjustments, pricing mechanisms, or other measures designed to secure supply, including potential price floors or offtake agreements. By effectively elevating uranium to strategic-asset status, the likelihood of direct policy support across the fuel cycle became considerable.
“We are seeing these types of transactions in other critical materials, so why not uranium?” the report questions.
U.S. policy targets call for a fourfold increase in nuclear capacity by 2050 and at least 10 new large reactors under construction by 2030. Such expansion would require a substantial increase in uranium supply, creating durable demand visibility for the industry.
At the same time, growing electricity needs from electrification, energy security concerns, and the rise of AI-driven data centers are strengthening the case for reliable, baseload nuclear power.
Problematic Supply
Supply-side constraints are becoming more pronounced. Kazakhstan, which provides about 40% of the global supply, has tightened its exploration and development controls. The state-owned producer, Kazatomprom, noted that current prices aren’t sufficient to justify higher production levels. Owing to underinvestment, concentration risks, and slow development, this stance further squeezes prices.
At the same time, utilities are entering 2026 with significant coverage gaps. Nuclear fuel contracts typically run years in advance. Yet, annual contracting volumes have fallen below replacement needs for more than a decade.
The shortfall has created deferred demand that is now building into the early 2030s. As utilities return to the market to secure supply, they may face fewer available options and higher prices, potentially accelerating the contracting cycle.
However, with dispersed resources and restrictive policy, the path to new production has been slow. Sweden, the uranium-richest European country, has recently lifted its mining ban after 8 years. Still, Australia, which holds nearly a third of global low-cost reserves, has maintained a strict ban in its mining-dominant western territory since 2017.
Consistent Outperformance
The renewed strength in uranium prices has translated into strong equity performance. Sprott clarified that physical uranium and uranium-focused equities have meaningfully outperformed both global stocks and broad commodities over the past five years.
The combination of strategic demand, constrained production, and utility catch-up buying suggests that the sector’s momentum may extend well beyond the early-year rally.
Price Watch: Sprott Uranium Miners ETF (NYSE:URNM) is up 29.13% year-to-date.
Photo by RHJPhtotos via Shutterstock
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