"Chris Shaw" wrote that the spot uranium price is now US$45 per...

"Chris Shaw" wrote that the spot uranium price is now US$45 per pound, which is down 5% from 3-month ago levels and compares to a spot price of US$52.50 per pound as at the end of last year. Prices rallied in October as an incident at the Olympic Dam mine saw a jump in the spot price to US$49.50 per pound, but this level has failed to hold.

Given the incident is likely to take about two million pounds of uranium out of the market by the first quarter of 2010 thanks to lost production at the project, industry consultant Resource Capital Research (RCR) suggests the current price weakness is a little concerning for uranium prices going forward.

Little change is expected in the near-term as RCR notes the Fund Implied Price, which is a good leading indicator for near-term spot prices, is currently trading at US$45 per pound having ranged between US$42-US$49 per pound since August. Most likely to influence prices in coming weeks according to RCR are expectations of increased uranium purchases by utilities on the buy-side, countered by ongoing concerns with respect to increased US Department of Energy liquidations on the supply-side. Currently RCR notes there are modest concerns in the market with respect to downside price pressures.

Long-term contract prices for uranium currently stand at US$61 per pound, down from US$70 per pound in December last year, while RCR notes there are 436 nuclear power reactors in operation and 53 under construction. Globally a further 436 reactors have either been planned or proposed, up from 376 in December of last year. This should boost long-term demand and so provide some support to prices in the years ahead.