URA: Political Events in Kazakhstan Returned Uranium to Commodity Traders’ Focus

Kazatomprom, the world's largest producer of uranium, provided an update to the market in terms of its uranium supplies and exports; having navigated the recent crisis without a disruption to production, Kazatomprom indicated near-term supply chain risks are no longer a concern.

Earlier this week Chevron (CVX) reported that the company finally resumed production at the giant Tengiz field, after interruptions were reported the prior week.

Though the Kazakh Government resigned on January 5th, a new Government was appointed and functional as of January 11th. Kazakhstan ranks first in the world in uranium mining and second in its reserves. According to WNA, uranium production in Kazakhstan in 2019 amounted to 22,808 tons (42% of world production), while uranium reserves exceeded 850,000 tons (15% of world reserves).

As a result, the near-term threat to energy supplies appeared valid again, as the recent political crisis highlighted a unique concentration risk in the global uranium market (URA) (CCJ) that is unveiling long-term pricing risks in this important nuclear commodity.

Global X Funds – Global X Uranium ETF (URA) is an exchange traded fund investing in global public equity markets. The fund invests in stocks of companies producing consumable fuels, uranium and enriching uranium ores. The fund seeks to track the performance of the Solactive Global Uranium & Nuclear Components Total Return Index, by using full replication technique. Global X Funds – Global X Uranium ETF was formed on November 4, 2010.

The fund has been underperforming since November 8, 2021 without any apparent reason, simply following general market trends. The political events in Kazakhstan returned uranium as a commodity to the spotlight, therefore we expect the $30 level representing 1Yr technical resistance to be reached fairly quickly despite the turmoil in Kazakhstan seems to be over.