By Andrew Nelson

Last week was a slightly busier one in terms of the deals concluded and the amount of stock shipped on the global spot uranium market. The problem remains that buyers just aren't faced with any pressing needs and increasingly cash-strapped sellers are growing more and more unwilling to accept lower prices.

All up, seven transactions were concluded over the course of last week and the action saw some 900,000 pounds change hands. Industry consultant TradeTech reports that the sell side was represented by producers and traders, while the buyers were utilities, producers, and traders for the most part.

A theme that has been developing for months now is that buyers are increasingly looking for delivery either late this year or early next year. TradeTech notes that most of the business transacted last week was for delivery over that period.

There was also a fair bit of turmoil in the uranium world last week. First, there was a terrorist attack on AREVA's Somair uranium mine in Niger. This resulted in one death and 14 injuries and AREVA has suspended all production indefinitely. Production from Somair runs at around 5m pounds a year.

The US Energy Commission also announced last week that it was unable to gain approval from the US Department of Energy to extend operations at the Paducah, Kentucky enrichment facility. USEC is now preparing to cease enrichment operations at the facility this week.

By last Friday, TradeTech's Weekly U3O8 Spot Price Indicator was at US$40.50 per pound, down US$0.25 from the prior week's value. There were no deals or new demand reported in the term uranium market last week, seeing TradeTech's Mid-Term U3O8Price Indicator stay put at US$44.00 per pound, while the Long-Term Indicator was flat at US$57.00 per pound.

Analysts at Macquarie had a few things to say about uranium last week as well. The first thing the broker notes is that it's pretty much the same market as we had three years ago, with very little having changed. The market remains fundamentally over-supplied and naturally, prices keep slipping. The safety net continues to be provided by China and its slow, but steady stockpiling.

The broker also couldn't help stating the obvious, saying that within the next few years additional primary mine supply will need to be added. What's more, the price will have to increase in order to incentivise this.

The problem that Macquarie has about this statement is that this was the case three years ago and it is still the case now. Three years ago we thought the inflection point was five years off, three years later and Macquarie still thinks it is five years off.

With uranium from dismantled Russian nuclear weapons leaving the market at the end of this year, the market will undoubtedly tighten. But Macquarie still thinks supply will be matching demand at that point given secondary supply is continuing to top up the supply side. The Japanese have certainly not been using their uranium over the past few years and their stockpile constitutes yet another supply side overhang.

That leaves us with the same problem seen in other mining industries, the only support is Chinese stocking and who knows when this will run out? The Chinese are currently importing a lot more uranium than needed for the operation of existing plants, that's for sure. The problem with Chinese buying is that deals are being done on the dips, so record levels Chinese uranium imports over the past few months have done nothing to lift the spot price.