By Greg Peel

Only three transactions were conducted in the uranium spot market last week, industry consultant TradeTech reports, totalling 350,000lbs. The market is awaiting news on who the winners and losers might be as term contract buyers reach the tender decision stage for some sizeable supply deals for the next year to two years ahead. Interest in term supply tenders continues to be solid but the initial excitement from the spot market has eased, with TradeTech's weekly spot price indicator remaining at US$52.00/lb.

Ahead of price news on term contracts, TradeTech's indicative term prices remain at US$54.00/lb (mid) and US$61.00/lb (long).

Buyers and sellers remain lined up on either side of the spot bid-offer spread, TradeTech notes, but uncertainty has led to neither being in a great hurry to meet the other. Aside from awaiting term tender results, other developments are adding to current market reluctance.

Most influential is the announcement by the US Department of Energy that it will extend by another year its program of selling stockpiled UF6 tailings for enrichment into commercial uranium to be used in reactors. The government has been selling UF6 on a incremental basis since last year and using the proceeds to fund various environmental clean-up operations. While the government has attempted to assure the uranium production industry its sales will be conducted in a way as to not impact on open market pricing, producers are objecting strongly to the program.

Earlier this year the spot uranium market, which has been trying to recover from the Fukushima fallout, was hamstrung by a price dislocation emerging between U3O8 demand for European delivery and UF6 on offer for US delivery, such that equated pricing produced a reverse global bid-offer spread and led to minimal spot transactions. Term market interest has grown strongly since, but the DoE sells some of its supply into the term market as well as the spot market. The current program represents sales of around 5mlbs of U3O8 equivalent per year which, on TradeTech's estimation, potentially represents some 25% of annual end-user demand.

On the positive side of the price equation, yet also introducing some uncertainty, global diversified miner BHP Billiton ((BHP)) has announced an intended scale-back in its significant capex program for the expansion of various global commodity projects due to a changing global macroeconomic climate. Under reconsideration is BHP's massive Olympic Dam project in central Australia which, aside from copper, boasts one of the world's most significant uranium resources.

And good news on the demand side is that China is expected next month to approve new post-Fukushima development and safety plans which will permit the recommencement of new nuclear plant projects. The Czech Republic has also decided to eschew the revised nuclear policies of neighbouring Germany and Austria by committing to build the country's fifth state-owned reactor.

There was also good news for investors in Australian-listed production major Paladin Energy ((PDN)) last week as analysts now see a light at the end of the tunnel on the company's cash burn. Difficulties and delays at Paladin's two Namibian uranium projects along with the Fukushima impact on spot pricing has seen Paladin going backwards for some time but analysts now believe the company will return to positive cashflow if not in the third quarter, at least in the fourth. (See Paladin Turning The Corner)

Analyst predictions are assisted by a generally bullish view on the uranium price in the shorter term.