Aug. 13 (Bloomberg) -- Uranium dropped to the lowest since March because of an oversupply of the metal used to make fuel for nuclear reactors, according to TradeTech LLC, an industry consulting company.

Metal for immediate delivery fell to $105 a pound, Denver- based TradeTech said in a weekly report published Aug. 10. One transaction was reported last week, TradeTech said. Tullett Prebon Plc, the world's second-largest inter-dealer broker and a dealer in uranium-futures contracts, sold 50,000 pounds of the metal at $105.

``Although current buying interest remains weak with only four discretionary buyers in the market, some are watching the recent drop in prices closely with a view toward reentering the market,'' TradeTech said.

The spot price has fallen 24 percent since rising to a record $138 in June. Utilities, the biggest buyers of uranium, have slowed purchases after building up inventories. Rising supply, the lending of material between users and concern over nuclear accidents after an earthquake in Japan last month caused a fire at a power plant have also pushed prices lower.

Demand on the spot market dropped to 800,000 pounds last week. Supply stood at 4 million pounds of uranium oxide concentrate, or yellowcake, TradeTech said July 27.

Prices may fall to as low as $70 as the U.S. Department of Energy prepares to auction 200 tons of uranium hexafluoride, a processed form of yellowcake, next week, said Mikhail Stiskin, an analyst with Troika Dialog in Moscow.

`Damage'

``I'm afraid that this auction will seriously damage the spot market,'' Stiskin said. ``Everyone's waiting for the auction to pass before revaluating their options.''

Futures contracts for delivery in February and in March dropped 16 percent last week to $99 a pound on the New York Mercantile Exchange.

``The spot price is still very high, and maybe utilities are waiting for it to come down,'' said Ossi Koskivirta, nuclear fuel purchasing manager with Espoo, Finland-based Fortum Oyj.

Koskivirta said spot prices will fall to $80 a pound. Still, mining companies will be ``very satisfied'' with sales at current prices as production costs at new mines are about $40 a pound, Koskivirta said.

To contact the reporter on this story: Yuriy Humber in Moscow at yhumber@bloomberg.net

Last Updated: August 13, 2007 08:23 EDT