The uranium spot price is currently trading at US$48.00/lb, up 18% from 3 months ago (US$40.75/lb) and compares with US$44.50/lb at the start of the year. The Fund Implied Price (FIP) is US$47.00/lb, which compares with US$46.00/lb Jan '10. The FIP has generally been a good leading indicator of near term spot price performance.

The uranium spot price is expected to find a floor around US$45-50/lb.

The gradual downward drift in spot and contract prices over the past 12 months reflects in part the tremendous growth in new mine supply from Kazakhstan's ISR projects.

Recent price influences driving the spot market up to US$48/lb are not entirely clear, though traders point to purchases from major producers. Utility purchases remain discretionary though timing of demand from long term Chinese inventory build remains a factor and will continue to influence short term market trends, as will, increasingly, Japanese and Indian utility purchases.

The World Nuclear Association (WNA) expects the market to remain in modest surplus through 2013/14.

Supply 2H10 is expected to increase, with stronger production from Kazakhstan, Ranger (ASX:ERA), Olympic Dam (ASX:BHP) and continued ramp-up at Paladin's Kayelekera mine in Malawi(ASX:PDN), partially offset by a potential decline in production in Niger where Areva is understood to have withdrawn expat staff following a series of kidnappings in the country.

The long term contract uranium price is US$60/lb, up from US$58/lb three months ago. It is down from US$61/lb Jan '10, though has been relatively stable since peaking at US$95/lb from May '07 to March '08.

Eoin Treacy's view Uranium has firmed considerably over the last few months but remains within an overall base formation which is consistent with the argument that the market is not short of supply in the short to medium-term. However, considering that the growth trajectory of new nuclear reactors continues to increase, and because oil and coal prices have firmed, investors are beginning to revisit uranium shares.

Cameco Corp has rallied impressively over the last month and is a little overbought in the very short-term. However a sustained move below C$27.50 would be required to question medium-term uptrend potential.

Paladin Energy rallied to break the medium-term progression of lower rally highs last week and the upside can continue to be given the benefit of the doubt in the absence of a sustained move below A$3.50.

Extract Resources hit an accelerated peak in September 2009 and has plotted a progression of lower highs since. It rallied impressively last week to break the short-term downtrend and a sustained move below A$6 would now be needed to question recovery potential.

Denison Mines remains in an overall base formation but is testing the upper side following an impressive advance over the last few months. It rallied to break the 15-month progression of lower rally highs last month and while overbought in the short-term a sustained move below C$1.75 would be needed to question medium-term upside potential.

Uranium One has almost doubled since June and is now testing the upper side of the developing base. A sustained move below C$3.35 would now be required to question potential for a successful upward break.

Areva, which I currently have a spread-bet long position in, continues to steady above €300 and a sustained move below that level would be required to question scope for some additional higher to lateral ranging.

Energy Resources of Australia pulled back sharply last week to retest the lower side of the four month range. It now needs to sustain a move above A$15 to indicate a return of demand dominance.