Written by Eric Onstad and Nell McKenzie
LONDON (Reuters) – Investment banks Goldman Sachs and Macquarie and some hedge funds are poised to reap the benefits of a newly booming uranium sector as nuclear fuel feedstock prices soar. There is.
While many other investment banks continue to avoid uranium trading, Goldman and Macquarie are increasing their trading in physical uranium, and in Goldman’s case, options trading, according to industry insiders familiar with the trading. Five hedge fund officials spoke.
The increased activity comes as power companies seek new supplies as shortages push prices to 16-year highs.
Several hedge funds are also ramping up their involvement in both stocks and physical uranium, a sign that uranium metal’s appeal is starting to spread to financial institutions after a decade of stagnation following the Fukushima disaster.
“Hedge funds and other commodity investors are returning to the (uranium) sector given the headlines and positive momentum around nuclear power in general. Many are doing so through physical funds to gain exposure to uranium prices. It’s the easiest way,” Blum said. Mr. Vanderelst of the trading company Curzon Uranium.
The metal has seen prices drop by 2 in the past year as top producers Kazatomprom and Cameco cut production guidance as mines that reopened from idled mines struggled to ramp up production to meet new demand. It has attracted the attention of investors after the price doubled to $102 per pound.
It will also involve a resurgence of nuclear energy to help countries reduce carbon emissions, following a statement by the Group of Seven Industrialized Nations in December 2023 that envisioned tripling nuclear energy capacity from 2020 to 2050. was emphasized.
Goldman Sachs has begun writing options on physical uranium for hedge funds, marking the first time it has created a derivative on the metal.
“Goldman is increasing its profile and is steadily increasing its books,” said a source who does business with the bank, declining to provide details because the transactions are confidential.
Goldman primarily deals with financial clients such as hedge funds, while Macquarie is primarily focused on increasing trading and marketing production by miners, said a second person who has done business with the banks. said a person involved in the transaction, but declined to provide further details as the data is confidential.
All five sources contacted by Reuters declined to be named because they did not want to discuss details of the private transaction publicly.
Both banks declined to comment.
NUFCOR’s uranium inventory
Goldman has been involved in the uranium market since 2009, when it acquired London-based nuclear fuel trader Nafkor.
But five years later, as uranium prices plummeted in the wake of the 2011 Fukushima nuclear disaster in Japan, Goldman tried to sell Nafkor but could not find a buyer and announced plans to wind down the business.
No operations were shut down, and Nafkor held uranium inventories worth $356 million at the end of 2022, according to the latest regulatory filings.
That’s enough uranium to fuel 17 large nuclear reactors for a year, based on Reuters calculations and World Nuclear Association data.
According to consultancy UxC, physical uranium purchases by investors through listed funds and hedge funds represent approximately 15 million pounds of uranium oxide concentrate (U3O8), accounting for approximately 26% of the total amount traded on the spot market in 2023. Occupied.
This was down from 22 million pounds of investor purchases in 2022, as rising prices in 2023 reduced the amount of uranium purchased per dollar.
“We’ve seen a lot of buying by investors, especially from 2021 to 2023,” said Jonathan Hinze, president of UxC.
See fact box.
U3O8 or yellowcake is a fine powder packed in steel drums that is produced when uranium ore is chemically processed.
Although the largest amount of physical uranium held by investors is held by publicly traded funds, a small number of hedge funds have been investing in stocks of uranium mining companies and other nuclear-related companies for several years, and are now investing in physical uranium as well. ing.
Sachem Cove Partners, a uranium-focused investment strategy with approximately $250 million in assets under management, in 2018 used physical uranium stocks and agents such as the Sprott Physical Uranium Trust to We have started investing in this field.
The company began purchasing physical uranium last year.
“This allows us to look at the physical market and both markets.
itself and the stock market,” Chief Investment Officer Mike Alkin said.
(Additional reporting by Melanie Barton in Melbourne; Editing by Emelia Sithole-Matarise)
