ASX shares in the uranium sector surged to multi-year highs last week thanks to a jump in spot prices.
The largest ASX-listed uranium player, Paladin Energy Ltd (ASX: PDN) surged 56% last week to an 8-year high of 78 cents.
Explorers were also quick to re-rate, with players such as Boss Energy Ltd (ASX: BOE), Deep Yellow Limited (ASX: DYL), Peninsula Energy Ltd (ASX: PEN) and Vimy Resources Ltd (ASX: VMY) surging between 32% and 45%.
The best performing uranium stock last week goes to 92 Energy Ltd (ASX: 92E), surging 104% to 51 cents. The uranium explorer successfully listed on the ASX on 15 April at a listing price of just 20 cents.
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What's driving ASX shares in the uranium sector?
The Motley Fool US reported that the Sprott Physical Uranium Trust (SPUT) Exchange Traded Fund began aggressively buying uranium from the spot market.
Sprott is the world's largest actively managed uranium fund that invests in physical uranium.
The fund's updates show that it bought a significant 900,000 pounds of uranium on 21 August and another 1.1 million pounds by the end of August.
The aggressive buying activity would continue through to September, with the ETF adding another 400,000 pounds on 2 September.
The immense buying on the spot market helped drive uranium prices to a six-year high of $35/lb.
The resurgence of spot prices initiated a frenzy of buying activity for ASX shares in the uranium sector last week.
In addition, The Motley Fool US highlighted another encouraging signal from the industry:
"… the world's largest uranium producer, Kazatomprom, announced its decision to keep production flat in 2022 and 2023, and meanwhile buy uranium from the spot market to meet its sales commitments through this year at least."
"Limited production and higher buying activity in the spot market, whether by an ETF or uranium miners to meet their contracted sales, is a near-perfect recipe to drive uranium prices higher."
