The uranium price is recovering from its lows.

The price of uranium, during the past two weeks, has bounced higher off its lows by nearly 20%. Mining disruptions may be the cause, and if lockdowns extend for longer, the metal’s spot price may go much higher. Value seekers looking to invest in a long-battered sector amidst the damage to the market by the virus may consider a uranium ETF. (ETF TRENDS)

Uranium market affected by mine closures

This is primarily due to the suspension of operations at the Cigar Lake uranium mine owned by Cameco Corp (NYSE: CCJ) due to COVID-19. The high-grade mine produces 13% of global output. Cameco earlier shut down its other large operation, McArthur River. Cameco is, therefore, likely to fulfill its contractual deliveries through spot purchases; these could amount to 20-22 million pounds to make up for McArthur, and now a lot more for Cigar Lake.

The radioactive metal checks more boxes

Over the long term, demand for uranium will propel higher due to new reactors coming up across the globe, particularly in China and India. Japan is restoring its nuclear generation after the Fukushima disaster.

Meanwhile, supplies from non-mining sources such as commercial stockpiles, nuclear weapons stockpiles, recycled plutonium, reprocessing used fuel, and re-enrichment of depleted tails are dwindling.

Moreover, Cameco and Kazakhstan’s national atomic company, Kazatomprom (LON: KAP) are the largest global producers of the nuclear fuel, and both are implementing mine closures or production cuts.

Though Cameco has shut down Cigar Lake too, it is not known if Kazatomprom will follow suit. The latter has already cut 2020 production by 20%.

Uranium looks bullish

One easy way to invest in the sector is via The Global X Uranium ETF (NYSEARCA: URA). The ETF is already making bullish moves off its lows.

The ETF targets the Solactive Global Uranium & Nuclear Components Total Return Index. The ETF’s components include companies engaged “in extraction, refining, exploration, or manufacturing of equipment for the uranium and nuclear industries.”

It has an expense ratio of 0.69%.

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