Commodity Trading Firm Mercuria Enters Uranium Market Amidst Rising Nuclear Demand

Mercuria Initiates Physical Uranium Trading Amidst Surging Demand

Geneva-based Mercuria, a prominent global energy and commodity trader, has reportedly commenced physical trading in uranium earlier this year, marking a significant entry into the niche nuclear fuel market. This strategic move positions Mercuria as the first major commodity house to engage in physical uranium trading, joining financial institutions such as Natixis and Citibank, which are also expanding their presence or exploring entry into this sector. The firm has reportedly poached Louis Csango from Goldman Sachs, a veteran in uranium trading, to lead its new operation. This institutional interest underscores a shifting landscape in the energy markets, driven by an anticipated surge in global nuclear energy demand.

The Nuclear Renaissance: AI and Zero-Carbon Targets Drive Demand

The renewed focus on nuclear power stems from two primary macroeconomic forces: the exponential energy requirements of artificial intelligence (AI) and the global push towards zero-carbon energy targets. The World Nuclear Association projects that demand for nuclear fuel is expected to more than double by 2040. Goldman Sachs Research indicates that data center power demand is projected to rise by as much as 165% by 2030, necessitating substantial new generation capacity.

Major technology companies are actively investing in nuclear energy solutions. Amazon has notably signed a Power Purchase Agreement (PPA) with Talen Energy Corporation for nearly 2 GW of nuclear electricity to power its AI and cloud data centers. Furthermore, hyperscalers are leading investment in next-generation nuclear technologies, specifically Small Modular Reactors (SMRs) and fusion energy, which promise cheaper, faster construction and enhanced safety. Governments globally are also championing nuclear expansion; 25 countries pledged at COP28 to triple nuclear energy capacity by 2050, with China aiming to become the world's largest nuclear energy generator by 2030.

Market Reaction and Equity Performance

The anticipation of robust demand has already translated into significant market movements within the nuclear and uranium sectors. The VanEck Uranium and Nuclear ETF (NLR) has returned 60.2% year-to-date as of September 2025, while the broader URA ETF surged 70.8% year-to-date. Notably, Oklo Inc. (OKLO), a next-generation nuclear power developer, has experienced an extraordinary 459.4% year-to-date increase in its stock price.

The spot price of uranium has exhibited considerable volatility but a strong overall upward trend, more than doubling over the past five years to reach $77 per pound. While this is below its February 2024 peak of $106 per pound, analysts like Arkady Gevorkyan at Citi project the spot price could hit $100 per pound next year. This optimism is tempered by the specialized and opaque nature of the uranium market, which is valued at approximately $15 billion annually.

A Widening Structural Supply Deficit

Despite rising prices and heightened interest, the uranium market faces a critical structural supply deficit. In 2024, global uranium production met only 80% to 90% of reactor demand, with the shortfall covered by diminishing secondary supplies and existing inventories. This historical reliance on secondary supplies is rapidly concluding. New mine development timelines have extended considerably, now taking 10-20 years, further exacerbating the immediate supply shortage.

Operational challenges are also impeding supply. Kazatomprom, responsible for roughly 40% of global uranium output, has reduced its 2025 production guidance by 12% to 17% due to a critical shortage of sulfuric acid. Furthermore, term contracting, crucial for securing long-term supply, remains well below replacement levels, with only 25 million pounds contracted by mid-2025, compared to 160 million pounds in 2023.

Policy Tailwinds and Regulatory Hurdles

Government policies, particularly in the United States, are increasingly supportive of domestic nuclear energy. The U.S. Department of Energy (DoE) has set a target of 400 gigawatts (GW) by 2050, a fourfold increase from the current 100 GW, which would dramatically boost domestic uranium demand. Policy support has extended to fast-tracking permitting for projects like Anfield Energy's Velvet-Wood and Laramide Resources' Crownpoint-Churchrock. However, regulatory uncertainty persists, particularly regarding a pending U.S. Section 232 investigation into critical minerals, which could lead to "Buy American" policies and reshape supply chains.

Challenges also exist in scaling up production, including technical complexities, high capital investments (e.g., NexGen's Rook I project requiring over $2 billion and a minimum $80/lb term price), and a significant talent shortfall within the nuclear engineering sector. The construction of the last two domestic reactors in the United States at Georgia's Plant Vogtle took approximately 15 years and cost over $35 billion, more than double initial projections, highlighting the complexities of large-scale nuclear projects.

Expert Outlook on Uranium Pricing and Market Dynamics

The consensus among analysts points to continued upward pressure on uranium prices. Jonathan Hinze, president of UxC, an industry consultancy, notes the market's barriers to entry:

"It's not a market you just break into easily, it takes a few years to maybe get your footing in the market."

Financial players, including traders and hedge funds, are highly active in the spot market, exploiting price inefficiencies through "carry trades" by purchasing spot uranium at around $65/lb and committing to future deliveries at $70/lb. This contrasts with a stable term contract price of $80/lb, reflecting producers' demands for sustainable pricing. The widening gap between demand and current production capacity means that utilities are increasingly expected to pay higher prices to secure future supply.

Looking Ahead: Sustained Growth and Volatility

The entry of major commodity traders like Mercuria into physical uranium trading is a testament to the fundamental shift occurring in the energy landscape. With AI driving unprecedented electricity demand and governments committing to ambitious carbon reduction targets, nuclear energy is positioned as a critical, carbon-free baseload power source. This confluence of factors suggests sustained growth for the nuclear and uranium sectors. However, the market's structural supply deficit, coupled with geopolitical uncertainties and the inherent complexities of mining and processing uranium, indicates that price volatility is likely to remain a defining characteristic in the short to medium term. Key factors to monitor include the pace of new mine development, the resolution of regulatory uncertainties, and the continued expansion of AI infrastructure and global nuclear capacity.