By Andrew Nelson

It was another slow week on the spot uranium market last week despite news of the restart of two Japanese reactors that were idled in the aftermath of last year's Fukushima meltdown.

Australian analysts at JP Morgan thought the news was quite positive, with the broker expecting to see more reactor restarts as Japan comes to grip with the peak electricity demand levels of summer.

Although JP Morgan wasn't overwhelmed by the news given its view the outlook for Japan still looks risky. The analysts were more concerned about China, saying the Middle Kingdom remains the real driver for demand growth. Right now, China has 26 reactors under construction, with another 171 in the planning and proposal stages.

JP Morgan believes uranium spot prices are simply too low for new supply to achieve appropriate returns. Yet supply is set to shrink, with Russia's yearly output of around 25 million pounds of downgraded uranium ending in 2013. That's 17% of global supply coming off the market next year.

Thus, JP Morgan predicts there will be an increasing supply deficit as minor players and secondary supply leaves the market by 2013. It sees upside to uranium suppliers and prices coming from this.

While the longer-term picture may be improving, Industry consultant TradeTech notes that a lack of urgent demand, combined with a number of sellers that worked hard to close deals, ended up seeing a little more downward pressure on spot uranium last week.

TradeTech's weekly U3O8 Spot Price Indicator slipped US$0.25 to US$50.75 on just four transactions that saw 700,000 pounds of U308 change hands.

It was mostly a story of traders and financial entities, with little heard from producers. TradeTech notes that geography is also becoming a limiting factor, given delivery in Europe is continuing to command a slightly higher price than North American stock.

There were only two trades on the term market last week, seeing another 800,000 pounds U3O8 changing owners. Both TradeTech's mid-term and long-term prices were unchanged at $54.50 (mid)