The bull case for uranium from U.S. nuclear trends - Citi
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THE BULL CASE FOR URANIUM FROM U.S. NUCLEAR TRENDS - CITI
Citi analysts said they remain bullish on uranium markets as the existing U.S. nuclear fleet offers incremental investment opportunities and can increase power generation due to higher baseload demand, policy, and power prices.
"More than ever before, U.S. nuclear energy developments are likely to have a meaningful impact on global uranium prices," said Citi analysts in a note dated June 4.
Citigroup upgraded its three-month global uranium (U3O8) price target to $97/lb, from around $89/lb right now UXXc1 and sees prices above $100/lb on a 12-month horizon. It expects prices to average $99/lb in 2024.
Citi believes a tangible market opportunity exists for the existing nuclear fleet to increase power generation and bridge the supply-demand gap. This could be through capacity factor improvements, upgrades, and bringing retired nuclear plants back in service.
They also think incremental power demand from AI/datacenters and electrification could drive efforts to improve utilization and incremental capacity upgrades to existing facilities.
"We forecast AI/datacenter growth to increase U.S. total power demand by about 456 TWh by 2030, which is equivalent to about 11% of U.S. total power generation."
Citi believes U.S. regulated utilities with nuclear assets are likely to receive production tax credit (PTC) cash flow benefits, and sees Duke Energy DUK.N, Entergy ETR.N, and Southern Company SO.N as being the most exposed.
"We think there is also an upside to un-contracted merchant nuclear power in the spot market in the future, as power demand is likely to structurally outpace incremental power supply by 2030."
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