CME seeks to revive uranium trading with physical futures launch

LONDON: CME Group plans to launch a physically based uranium futures contract in the coming months, a move that could attract more institutional money into the thinly traded and opaque market, three sources familiar with the plans told Reuters.

The contract marks a departure from CME’s existing, financially settled uranium futures, which have seen scant volumes, and comes as investor interest in nuclear fuel surges on expectations of new reactor builds to meet climate targets and power energy-hungry data centres.

“This will be a huge step forward for the uranium market,” said John Perdew, co-head of nuclear fuels at broker TP ICAP.

“There’s a lot of eyes on uranium, a lot of new capital looking at it. There’s a futures contract, but it only has 350 lots of open interest and four prices a month. That’s not what they (investors) want.”

The CME declined to confirm the move, but said: “We’re always talking to our clients to understand their risk management needs.”

Under the new contract, uranium will be stored with ConverDyn, one of the few facilities that is licensed to store the metal, Perdew said. The CME contract is based on U3O8 or yellowcake, which has relatively low radiation, but is tightly controlled since enriched uranium is highly radioactive and can be used in nuclear weapons.

Funds and other investors are showing fresh enthusiasm for uranium due to the acceleration away from fossil fuels following price spikes triggered by wars in Ukraine and Iran, but many have been deterred by limited price transparency and the lack of exchange-traded instruments.