By Luke Brocki - Exclusive to Uranium Investing News and U3O8.biz ^[1]

Despite some of the world's biggest economies falling into recessions, uranium bulls continue to press that the metal may have found price bottom.

Uranium prices continue to creep upward, fuelled by higher demand and lower supply in the form of troubling news from producers. Price publisher Tradetech indicates the spot price now hovers around US$48, after posting a US$2-increase last week, driven by six transactions concluded at current price levels.

Tradetech broke down the producer troubles as follows: Kazatomprom announced last week that it expects 2009 production to be some 14 per cent less than previously forecast, and Cameco informed says its McArthur River project had experienced a "modest increase in water inflow". Water troubles are nothing new for Cameco, whose beleaguered Cigar Lake mine continues to struggle with the same issue and now may not reopen till 2011.

Cameco is also planning to lay off some employees at its Port Hope conversion facility by mid- December, according to a local union leader. United Steelworkers Local 13173 President Chris Leavitt told the Canadian Press that were going to take place as the plant's uranium hexafluoride building is expected to close until at least the summer  of 2009.

Uranium One is another uranium producer longing for the good old days. According to the Canadian Press, the company has recently taken a US$2.8-billion writedown and is cutting costs across all operations. The company remains active in Kazakhstan, South Africa, the United States and Australia, but placed South Africa's former flagship Dominion mine on care and maintenance last month. It's also delaying and seeking partners in other projects while cutting exploration spending.

Uranium One said last week it booked a $2-billion third-quarter net loss from continuing operations, or some $4.30 per share. CP reports the company's revenue for the latest quarter was $49.4 million, as it sold some 848,000 pounds of yellowcake at $67 a pound against an average cash cost of $14 a pound. Uranium One CEO Jean Nortier says the company is doing all it can to respond to today's economic challenges. In addition to cutting spending, the company is shifting its focus on developing low-cost assets in Kazakhstan.

But it's not all bad in the producer sector. Toronto's Denison Mines Corp. reported a small profit in the third quarter. It made just US$332,000, but that looks pretty good when compared with a net loss of $11.7 million for the same period in 2007. Denison reports its revenue nearly quadrupled to $36.5 million from $9.4 million, as it sold some 370,000 pounds of uranium fuel for nuclear power plants in the quarter from U.S. production at an average price of $66.12 per pound.

Still, the bottom line is that slim production forecasts have always heralded periods of growth for uranium, as they tend to balance gaps between supply and demand. And this time it's no different, as demand has gunned ahead of supply for the first time in months. Tradetech says demand reached 5 million pounds compared to some 3.4 million pounds offered, hence the potential for spot price increases in the near future.

Finally, another factor in the strengthening spot prices is the creation of yet another uranium fund. Deutsche Bank and New York Nuclear are looking to create an investment vehicle trading in physical uranium. According to Bloomberg, the fund will look to raise US$100 million in an initial public offering and its potential to sustain upward pressure on spot prices has driven uranium bulls into a frenzy of excitement.