By Greg Peel

Activity in spot uranium remains limited while term market interest is building. The uranium term market is what we might call the "real" market, featuring global nuclear utilities arranging delivery contracts over periods of time on the buy-side and actual producers of uranium on the sell-side. Such contracts are tendered and negotiated and things move slowly. When you are looking for, say, five years' worth of U3O8 supply, there's no real need to rush.

The spot market, on the other hand, is the forum for utilities to jump in to cover inventory shortfalls or for producers to cover shortfalls on contract obligations. To do so requires speculators in the market ? uranium traders and hedge fund commodity investors ? to offer up liquidity as they try to exploit the short-term needs of the "real" players. When the uranium market is "hot", as it was in 2006 for example, the spot market becomes a hot bed of speculation and liquidity. When it is "cold" has it has been post Fukushima, no one much wants to play.

Last week three utilities and two intermediaries concluded spot purchases totalling around 600,000lbs of U3O8 equivalent, industry consultant TradeTech reports. TradeTech's spot price indicator has been range-trading of late and having fallen US25c the week before, last week the indicative price rose US25c to US$35.25/lb. While prices under US$40 offer up doldrum territory for the commodity, sellers are reluctant to be too aggressive given the balance of apparent supply in the term market.

New demand continues to emerge for term supply contracts, TradeTech reports. Three global utilities are currently evaluating U3O8 delivery offers, one for 1.3mlbs in 2016, one for 1mlbs in 2015-19, and one for 1.2mlbs over a six-year period. Another utility is seeking 900,000lbs via UF6 or highly enriched product for 2015-20. It's not if the demand isn't there.

It's just that no one is in a hurry. TradeTech's term price indicators remain unchanged at US$38/lb (mid) and US$51/lb (long).

Meanwhile, Australian producer Paladin Energy ((PDN)) last week updated the market on the cost-cutting program it announced a year ago. Costs at the company's Namibian operations are to be reduced by 25% and 22% at Langer Heinrich and Kayelekera respectively, with salaries for the board also to fall by 10%.

Analysts at UBS applaud the cuts but note such expectation was already priced in, with spot uranium doldrums and subsequent cash burn remaining the company's critical issue.