Here's my take on the uranium market. A month or two ago, the...

Here's my take on the uranium market. A month or two ago, the bullish case for uranium stocks was predicated largely on 1) the ending of the HEU (megatons to megawatts) program 2) Japanese reactor restarts and 3) a uranium spot price that seemed like it couldn't go any lower. However, with hindsight these factors proved to be false hopes. HEU and Japan are probably priced into the market.

Yet those factors have been relentlessly reiterated as the key to the uranium renaissance. I never spoke much about the HEU program end as a catalyst, but I did write about Japanese restarts. Investors were understandably losing interest in the uranium bull thesis as the price languished around $34-$35/lb much longer than expected.

Today, I wouldn't say that the uranium stocks or underlying fundamentals are on fire, but there have been some very important developments. If one is watching for evidence of a turn in fundamentals that could positively influence uranium pricing, we have some prime candidates.

1) France is NOT retrenching from Nuclear power. The fear was that France would reduce the proportion of nuclear power from roughly 75% to 50%. Recent news items suggest this is not the case, France is not shutting down additional reactors beyond those already announced.

2) BOTH Kazakhstan AND Russia have clearly stated they will curtail all uranium production growth projects until market conditions improve. Kazakhstan is more than twice as large as the second largest uranium producing country and has accounted for well over 50% of the total growth in global production over the past decade.

3) The spot price has improved modestly as some producers (like Energy Fuels in the U.S.) plan to deliver third party spot uranium into contracts instead of produce their own uranium. Cameco's delay of Cigar Lake was another bullish indicator.

Instead of continuing on to name other potentially bullish but less impactful factors, let me reiterate the importance of just the 3 mentioned above. Factors 1 & 2 especially are huge developments in the market only announced in the past month or so. Have readers of this post heard a lot about them? I for one haven't seen much written on these clearly bullish developments.

Does this mean that we're off to the races and that uranium prices are poised to spike? I have no idea. But, the chance of a meaningful move up in the uranium price, perhaps now sooner rather than later, is unquestionably higher than it was a month ago. Given factors 1 & 2 above, both the timing and the magnitude of the eventual rebound in uranium prices has improved.

I would not want to be short uranium or uranium stocks (or under-invested on the long side) given these very recent developments.