What happened

Uranium stocks plunged today as the broader markets slid on fears of soaring inflation and a looming recession, what with a majority of leading economists even predicting the U.S. will slip into a recession in 2023, according to The Financial Times.

Ironically, the business environment couldn't be more conducive for uranium stocks. One of the miners, in fact, even announced a big acquisition this morning; and President Joe Biden's latest plan could mean big days ahead for local uranium miners. Yet as panic selling gripped the markets, here's how some of the popular uranium stocks were faring as of noon Monday (all had dropped even lower earlier in the day):

  • Uranium Energy (UEC -1.78%): down 12.6%
  • Denison Mines (DNN -1.00%): down 7.9%
  • NexGen Energy (NXE -0.13%): down 8.3%
  • Energy Fuels (UUUU 2.29%): down 9.3%
  • Cameco (CCJ 0.16%): down 8.3%

So what

Prices of nearly all types of commodities -- including precious metals, agricultural products, and energy -- fell on Monday. Uranium prices, though, held pretty firm at around $52.40 per pound as of this writing, according to data from TradingEconomics.com, having rebounded over the past three weeks or so. For context, uranium prices had shot up almost 50% this year through mid-April when they hit 11-year highs of $64.50 per pound before swiftly reversing course.

The war between Russia and Ukraine has disrupted the global energy markets and driven prices of oil and gas to multiyear highs. This unanticipated turn of events has forced policymakers worldwide, especially in regions like Europe that are already facing an acute energy crisis, to renew their focus on nuclear energy to fill gaps in gas supply and ensure utilities can meet power demands. Uranium is the key fuel that powers up nuclear reactors to generate electricity.

Demand for uranium, therefore, has soared even as supply remains tight. The world's largest uranium miners are running low on supplies since they curtailed production in recent years to support the market. In its recent earnings conference call, Cameco, the world's largest publicly traded uranium miner, even called the current uranium market more positive than it has seen in a very long time.

Prospects are so strong that miners worldwide are restarting uranium mines idled for several years now. Elsewhere, companies in development stages are scrambling to advance projects and start mining uranium as early as possible. One of the best examples is Uranium Energy, which is making aggressive growth moves. Just this morning, it announced plans to acquire Canada-based UEX (UEXC.F) to gain entry into the world's richest uranium-resource region. The combined companies will have the largest uranium asset base that is focused exclusively on North America. 

Yet, with most uranium stocks gaining significant ground in recent months, scared investors dumped shares today.

Now what

Given the geopolitical environment, the oil and gas markets are not likely to cool down anytime soon. That, and the threat of the U.S. banning uranium imports from key supplier Russia, could keep uranium prices humming.

President Biden, in fact, is reportedly seeking $4.3 billion to boost domestic uranium enrichment capacity in a bid to reduce reliance on Russian imports, according to Bloomberg. Russia accounted for 23% of enriched uranium used to power commercial nuclear reactors in the U.S. in 2020.

The problem is that none of the publicly traded uranium miners are involved in uranium enrichment right now, and the U.S. has only one commercial enrichment facility, owned by U.K.-based Urenco. Cameco, for that matter, has a 49% stake in GLE, a company that's developing a uranium enrichment technology.

That's all there is in the U.S as far as uranium enrichment is concerned, and even $4.3 billion will not be able to boost domestic enrichment overnight.

The key takeaway here, though, is that President Biden seems keen to boost the domestic uranium market, and that means the threat of the U.S. banning uranium imports from Russia still looms large.

With things moving so quickly in the uranium markets, I'd shrug off the stock market's fears and still be bullish about uranium stocks.