Enriched Uranium

 

 

Enriched Uranium

It was recently announced that the expected cost of building the Sizewell C nuclear reactor in Suffolk has nearly doubled to £38bn, at 2024 prices. (See Alpha Bites ‘Going Nuclear’ 23rd June 2025.)

The government said it will take a 44.9% stake in the project with the balance funded by a number of businesses, including EDF and British Gas owner, Centrica.

The nuclear plant is expected to be operational by the mid-to-late 2030’s and will supply electricity to the equivalent of 6 million homes for at least 60 years. The jump in the cost of building Sizewell C reflects labour and construction costs as well as inflation.

However, a nuclear power plant needs uranium, so what has been happening to uranium prices?

Despite a global nuclear rollout, uranium prices have been quite weak over the last 12 months. Trump trade tariffs and geopolitics have played a part, while Kazatomprom, a Kazakhstan uranium producer increased production, but also wound up its physical fund of uranium creating a stock overhang. Russia is also a major producer and hopes of a Trump driven peace deal with Ukraine raised the risk that a Russian fuel ban on the export of enriched uranium may be lifted.

Could the outlook be improving?

Nuclear energy currently provides approximately 9% of the world’s electricity from about 440 power reactors globally. Over the last 20 years, decommissioning of old plants have matched the number of new reactors being built. However, the total number of nuclear power stations is set to increase, with 100 new reactors being planned.

Governments around the world continue to extol the benefits of nuclear power and its core role in the energy mix, as illustrated by the renewed promise to triple nuclear generating capacity at COP29 in November 2024. Since then, Trump has announced a target to quadruple US generating capacity to 400GW by 2050 and 10 new reactors are under construction. At the same time, large US technology companies are focusing on nuclear capacity to secure clean baseload power for their AI datacentres. Meanwhile, China continues its aggressive reactor build out, with the recent announcement of another ten large scale reactor construction approvals. Even the UK has joined the nuclear race with Hinkley C underway, Sizewell C on the runway and plans for a number of small modular reactors (SMRs).

Growing global nuclear power demand comes as the uranium supply landscape remains highly constrained, with only a handful of key producing countries and is politically sensitive. However, a Ukraine peace deal could release Russian uranium back onto the market. Putin and Trump have held talks, and now President Zelensky and some European leaders are meeting Trump later today. Will there be a peace deal?

Uranium could have a glowing future, but much now rests on how events in Ukraine unfold.

What have we been watching?

The Trump/Putin Ukrainian peace talks in Alaska and US equities hitting another record high on hopes of more aggressive interest rate cuts by the Federal Reserve (Fed) despite higher -than- expected US producer price inflation driven by tariffs. A further extension of the tariff truce between the US and China also aided equity sentiment. However, bond markets were alarmed by the US producer price inflation data which saw a steepening in bond yield curves with the 30-year US Treasury yield climbing above 4.9%.  

Trump and Putin met in Alaska to discuss Ukraine. President Zelensky is meeting Trump later today supported by a number of key EU leaders. It looks as if Putin wants the entire Donbas region including that not already occupied by Russian forces. In addition, Trump has signalled that Ukraine must give up any hope of re-claiming Crimea. Meanwhile, Putin has offered to halt forces where they are, in parts of Ukraine, but does seem to have agreed to US security backing for Ukraine. Trump will be itching to push a peace deal through but is it one Zelensky can accept and sell to the Ukrainian people? A peace deal would be welcomed by markets, but will Europe be safer?

The main catalyst driving equities higher has been mounting speculation that the Fed could cut US interest rates as soon as its next meeting in September, with the hope that a series of cuts would help maintain America’s economic expansion and support risk assets. This followed comments from US Treasury Secretary Scott Bessant, who added to the calls for more aggressive rate cuts. Indeed, markets are now pricing in a high likelihood of a 0.25% US interest rate cut in September and are expecting a more aggressive cycle of rate cuts beyond this. US interest rates are now expected to fall by over 1% by mid-2026. However, even as the US administration were calling for faster US interest rate cuts, Fed officials were still sounding cautious. The Fed are still no doubt wary of the impact of Trump’s tariffs on US inflation.


 

In the US, inflation in July was not as high as expected with annualised CPI hitting 2.7%. However, this figure was held back by lower US gasoline prices. Core inflation (excluding food and energy) in July was higher than expected at 3.1%. Despite this, markets were reassured because the inflationary impact from Trump’s tariffs on core goods prices in July did not appear as bad as feared. For example, household appliances inflation which saw its biggest monthly price jump on record in June of 1.9%, dropped by 0.9% in July. Fed officials may be inclined to take a cautious view on interest rate cuts as it may still be some time before a clear picture emerges on the impact of tariffs.

To add to the uncertainty, US producer prices increased by 0.9% in July which was well ahead of market expectations. The concern is that this signals the start of a more sustained period of elevated inflation, particularly as higher tariffs continue to be passed through to consumers. The July data does not include Trump’s new tariffs imposed on 7th August and many US businesses may have delayed re-pricing, suggesting the full impact may not be immediate.

There was also angst for US investors following Trump’s latest political appointment. Following the sacking of the head of the Bureau of Labour Statistics after a grim jobs report, Trump has appointed EJ Antoni, a fierce loyalist and cheerleader for the president’s tariff and economic strategy.

Trump announced a further extension of the tariff truce between the US and China, for another 90-days and China in turn, reciprocated with a new deadline of 10th November. Additional tariffs of 30% remain in place on Chinese goods since the first truce agreed in mid-May. Trump also that he would allow AI-chip giant Nvidia to export a scaled-back version of its most advanced AI chip to China.     


 

In the UK, economic growth was stronger than expected in June at 0.4% with growth during the second quarter coming in at 0.3%, helped in large part by belated government stimulus. However, private demand was very weak in the second quarter with soft household consumption and a contraction in business investment. The Bank of England remains focused on inflation, employment and wage growth, but will no doubt be monitoring weak private sector demand and deteriorating labour market conditions very closely.

Meanwhile, the July RICS survey points to a recent softening in the UK housing market, with buyer demand falling after a more promising June reading. Meanwhile, the steepening of global bond yield curves, saw the 30-year UK Gilt yield climb above 5.5% creating yet more pain for Chancellor Rachel Reeves.


 

In the second quarter, economic growth across the EU slowed to 0.2%, from 0.5% in the previous quarter.


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Brent oil continued to drift, edging below $66 although traders continue to await the outcome of the potential Ukrainian peace talks.


Finally, it never just rains but it pours albeit the lack of rain and water supply is proving a big headache for the UK’s farming industry. Troubled Thames Water is pressing ahead with plans to build one of the UK’s first new reservoirs in 30-years in Oxfordshire. However, the cost of construction has already increased three-fold above its original estimate with a budgeted cost of between £5.5bn-£7.5bn. Its customers will pick up the tab through higher prices. The UK’s track record of going well over budget on major infrastructure projects shows no sign of abating!

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