I mostly agree with Zubana's comments above. Actually I do, but I think the supply crunch remains opaque - or at least not well understood - and it is likely whats happening in the secondary markets and enrichment that eventually forces the hand of utilities to contract.
For example, and this is a rehash of a prior post of mine, there was, back in 2005, inadequate primary market supply to cater for the global demand. However the gap was being managed by the secondary supply market so although there was a an opportunity for miners, there did not seem to be an impending crunch.
2005 Production
Uranium production in 2004 totalled 40 263 tU, an increase of almost 12% from the 36 050 tU
produced in 2002, and an even greater increase from the 35 492 tU produced in 2003, a year in which output was reduced at key production facilities by unrelated incidents.
2005 Uranium Demand ((World 370.23 GWe net as of 1 January 2007))
At the end of 2004, a total of 440 commercial nuclear reactors were operating with a net
generating capacity of about 369 GWe requiring about 67 320 tU.
2005 Supply/Demand
At the end of 2004, world uranium production (40 263 tU) provided about 60% of world reactor
requirements (67 450 tU), with the remainder being met by secondary sources including excess
commercial inventories, the expected delivery of LEU derived from HEU warheads, re-enrichment of
depleted uranium tails and spent fuel reprocessing.
2005 Conclusion
Regardless of the magnitude of the role that nuclear energy ultimately plays; the uranium
resource base described in this document is adequate to meet projected future requirements. However,
a continued strong market and sustained high prices will be necessary for resources to be developed
within the timeframe required to meet uranium demand.
And yet, the spot price rocketed for the next few years. IMHO, I think the play or margin between tails extraction, SWU price and Uranium mining is THE key point. I dont think utility buyers give too much of a toss about spot. I think they contract on what they feel is more economic across their contract term - looking at the cost of extracting more and more U235 if assays are in supply, or turning to the market to dig up more U if its less costly. So its not a simple commodity model (as we all know). The model of world demand versus global supply is jsut one simplistic view of the story. I believe crunches happen regardelss of the levels of U available by miners, and that crunch occurs when its no longer economic to enrich tails. I think that's when the tap turns off as all of the utilities realise in one broad stroke that, based on SWU pricing, it is now more economical to turn to the miners for supply of U rather than enrichers.
A good description here illustrates this better than I can articulate.
