By Greg Peel

Post the Fukushima fallout, it seemed for a while that US$50/lb was a line in the sand below which utilities were happy to pick up "cheap" supply. At 40/lb it seemed utilities had bought their fill, with Japanese stockpiles an ongoing source of additional supply. By 35/lb the spot uranium market was looking very bleak, despite consensus views supply would be shut down or plans curtailed due to such low prices, offering longer term upward price pressure.

That view still holds, and over the past few months contract bidding for supply in the 12-24 month delivery range drew some attention away from the lesser entered spot market, where traders and speculators, and even producers with cash flow issues, were becoming increasingly more desperate. And so it was that capitulation in July led to a 14% drop in the spot price to US$34.50/lb ? no less than a 7-year low ? before a slight rebound to 35.00/lb on the death.

A total of 25 spot transactions involving nearly 4mlbs of U3O8 equivalent were booked in July, industry consultant TradeTech reports. TradeTech's end-July spot price indicator of US$35.00/lb was down US$4.55 from end-June.

Then suddenly, late last week, and institutional buyer entered the market looking for up to one million pounds of U3O8. A big punt? Two actual utilities also entered the fray, seeking around 400,000lbs between them. Capitulation selling is a wonderful thing. Immediately those sellers who had not yet bottled went on the back foot, fearing a low-price tolerance level had now been breached.

As a result, TradeTech's spot indicator is up US$1.25 for the week to US$35.75 (from last week's 34.50 low).

The bounce in price came despite some less than inspiring industry news. In Australia, one time high flyer Paladin Energy ((PDN)) bit the bullet and issued new capital at a 25% discount, having failed to find any buyers interested in a stake in its world class Langer Heinrich development in Namibia. The new capital is enough to plug a hole in the balance sheet, but not enough to prevent ongoing cash burn at low uranium prices ahead of the company's 2015 debt refinancing obligations.

In other news, French utility Electricite de France pulled out of the US nuclear market while US company Progress Energy decided to shelve plans for its Levy reactor project.

One swallow does not a summer make, but it's hard to find an industry analyst who does not feel uranium prices will move gradually higher over the medium to longer term, back towards the pre-Fukushima levels above 70/lb. China continues to build new reactors, Japan should soon be switching more back on under the new government, it is assumed, while shelved development/expansion plans and production curtailments mean increasing demand will hit falling supply.

TradeTech's term price indicators have now dropped to US$39.00/lb (medium term) and US$54.00/lb (long term). These prices are down from US$43/lb and US$57/lb respectively.