By Greg Peel

Last week a mere three transactions occurred in the global spot uranium market, totalling 500,000lbs, industry consultant TradeTech reports. TradeTech's spot price indicator remains unchanged at US$51.25/lb. Year to date trading has seen 8.2mlbs of U3O8 equivalent change hands compared to 18.4mlbs in the same period last year. We recall that the Japanese tsunami hit in March last year.

It must be noted that uranium is not particularly suited to spot trading. The price of a commodity enjoying globally high and wide everyday demand, like copper, is very much suited and thus the spot market is the dominant price-setter. Bulk materials such as iron ore and coal, which big steelmakers stockpile rather than order in at the last minute, have long been traded on yearly price settlement but they are now moving closer to spot pricing given the China impact and competitive supply. Alumina is one commodity now looking to spot trading after a history of fixed price linkages. LNG, however, is still traded very much on 20-year offtake and equity sharing deals, for example.

Uranium is not a widely consumed commodity globally, and not widely mined. Supply is dominated by a handful of big players. Nuclear reactors take a very long time to build, and use a large amount of uranium to fire up. Once fired up, a much smaller amount of uranium is needed to keep them going. Supply contracts between suppliers and consumers are thus also of the term variety, for anything from one to twenty years. Deals are tendered and negotiated for weeks and months can go by without any transactions. The spot uranium market is mostly used to cover miners' supply contract shortfalls or sudden small-order