TORONTO (miningweekly.com) - The uranium spot price firmed in October, after BHP Billiton reported an accident at its Olympic Dam copper/uranium mine mine, in Australia, but has failed to find support at the higher level, Australian equity research firm Resource Capital Research (RCR) commented on Friday.

The spot price of uranium rallied from $43,50/lb to $49,50/lb by the end of October, following the Olympic Dam incident on October 6, but has retreated to $45/lb.

"Given the incident is likely to remove two-million pounds of U₃O₈ from the market by the first quarter of 2010 (when production is expected to recommence), in our view it is a little concerning that there hasn't been a more sustained price response," RCR commented in a quarterly report on the uranium market.

At $45/lb, the spot price is 5% lower than three months ago, when it traded at $47,50/lb, and well below the $52,50/lb at the end of December 2008.

RCR's price outlook is "flat", with no significant change in the uranium spot price expected in the near term.

The analysts point to the so-called Fund Implied Price, which stands at $45/lb, and which is generally a good leading indicator of near-term spot price performance.

Since early August, the FIP has traded in a range of about $42/lb to around $49/lb, RCR said.

"However, market views on near term price outlook are not uniform, driven by expectations of an increase in utility purchases in the New Year leading to increased demand; countered by ongoing concerns about the impact of increased Departmenr of Energy liquidations on supply, with modest concerns of downside price pressure."

The long-term uranium price, the price at which suppliers sign long-term contracts, is currently $61/lb, compared with $70/lb a year ago.

The price has been relatively stable, compared with the more thinly-traded spot market price, since peaking at $95/lb from May 2007 o March 2008.

There are currently 436 nuclear power reactors in operation and 53 under construction, RCR said.

There are 436 new nuclear reactors planned or proposed globally as of this month, up from 376 this time last year.

A total of 69 new reactors are expected to be commissioned by 2016.

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