Uranium (US$/lb)

Europe’s electricity system is under mounting pressure as extreme heat disrupts nuclear and hydroelectric generation, with record heat-related outages at France’s nuclear fleet, falling river levels threatening Hungary’s only nuclear plant, and drought reducing hydro output across the Alps and Nordic region. The situation has been exacerbated by higher natural gas and coal prices following the US-Iran conflict, raising the risk of persistently elevated power prices as France loses record nuclear output and Norway’s hydro reservoirs replenish at their slowest pace in two decades ahead of winter – nuclear currently satisfies over 20% of EU electricity generation.

• The European situation highlights the critical water requirement in current technology for cooling in nuclear technology.

Coal and uranium have taken very different paths since 2022, reflecting contrasting energy market dynamics. Coal surged to record highs during Europe’s energy crisis following Russia’s invasion of Ukraine before falling sharply as supply normalised, while uranium rallied on renewed confidence in nuclear power, supply constraints and utility contracting, remaining more than 100% above its 2022 level despite a recent pullback. The divergence highlights the changing energy landscape: thermal coal has largely unwound its crisis-driven gains, whereas uranium has benefited from the structural shift towards nuclear energy as a reliable, low-carbon baseload power source.

The divergence between coal and uranium prices reflects the longer-term energy transition narrative favouring nuclear over thermal coal, but they both have a role to play in an AI world thirsty for power.

• We believe uranium is vital to both the world’s AI-driven energy needs and clean energy ambitions, but the European weather patterns have delivered a short-term hiccup.