By Greg Peel

After a flurry of activity the week before last, which might have signalled renewed interest in spot uranium at the lower price, last week activity levels fell back to minimal again. Industry consultant TradeTech reports only 400,000lbs of U3O8 equivalent changed hands compared to the previous week's 1.6mlbs.

TradeTech's spot price indicator remains at US$51.00/lb and the low and relatively stable price is attracting buying interest from utilities and producers, TradeTech notes, but no one's in any rush. There is more solid demand beyond the spot market into slightly longer dates. No transactions were reported in the term market this week however, and TradeTech's term price indicators remain at US$54/lb (medium) and US$60/lb (long).

RBC Capital Markets has lifted its own long term uranium price forecast to US$60/lb, up from US$55/lb, following a March quarter industry review.

RBC is forecasting uranium demand to grow by an average 4.9% per annum from 2013 to 2020 driven primarily by nuclear power growth in China. On the other side of the ledger, RBC sees mine supply increasing by only 4.1% per annum over the same period. The analysts believe the beginning of 2014 will see a slight deficit in the demand-supply balance with that deficit growing thereafter.

Since Fukushima, mine permitting and development has slowed, RBC notes. There are big supply increases planned in Kazakhstan and for BHP Billiton's ((BHP)) Olympic Dam project but these will be price-dependent, the analysts suggest, and not likely until well into the next decade. RBC believes there will not be enough uranium production, either current or planned, to meet reactor needs, initial core requirements and new reactor inventories. Sustainably higher prices are needed to encourage a more substantial supply-side response.

The prospect of deficits ahead should be a catalyst for higher prices, one would assume, and RBC's increased long term forecast price also reflects increased operating costs for miners. Yet the analysts believe spot uranium will continue to range-trade in 2012, between US$50 and US$55/lb.

It will be toward the end of 2012 that the market begins to think more seriously about the end of the HEU (highly enriched uranium) accord between the US and Russia, which has seen the long term dismantling of Russian warheads and sale of HEU into the commercial market. The end of the accord will result in a significant supply source being removed from the market. That's when prices will start to rise, RBC suggests.

Japan has been shutting down reactors ever since Fukushima and there has been much media focus on this process lately given the first anniversary of the tsunami. People power has had a lot to do with the shutdowns and the assumption is across the globe that these reactors will remain shut forever. Citi, however, does not believe this will be the case.

The Japanese reactors were shut down pending safety reviews in the wake of Fukushima's failure. Given the dramatic impact on Japan's economy from the loss of a significant power source (Japan is the highest consumer of nuclear power per capita), Citi suggests Tokyo will start persuading local authorities as early as June to allow those reactors passing new and strict safety tests should be restarted.

If this is the case, restarts would impact on the demand-supply outlooks for both uranium and LNG ? the latter being the substitute power source of choice by global assumption.