September 25, 2007 / 11:57 AM / 12 years ago

Rhenium deficit helps prices to new record high

LONDON, Sept 25 (Reuters) - Rhenium prices have jumped more than 12 percent this month to a new record high around $9,000 per kg because of scarce supplies and strong demand from the aerospace industry.

Traders said supplies of the rare metal that has become crucial for the aerospace industry cannot match growing demand and that prices were on course to hit $10,000 per kg.

Prices of rhenium — used to make aero engines more efficient and environmentally friendly — are up more than 60 since the end of last year.

“It’s getting harder and harder to find good quality raw material. We are spending more time trying to extract rhenium from scrap because of the shortage,” a UK-based trader said.

“It is also much more expensive to finance and hold rhenium stock because three years ago a million dollars would have got you 1,000 kilos of rhenium, today a million dollars would get you about 120 kilos of rhenium.”

Latest estimates put rhenium demand this year at around 65 tonnes compared with supplies of between 47 and 52 tonnes depending on output from major producer Kazakhstan.

Other large producers include Chile and the United States.

For next year, the deficit is estimated at around 14 tonnes and in 2009 it is forecast at more than 16 tonnes.

But those deficits would be higher if market talk that Russia is looking for rhenium for new aerospace and military aircraft programmes is correct.

Neither the United States nor Russia are thought by traders to have any rhenium stockpiles.

“The market is starting to pick up after the summer lull, we could easily move another $500 next week, it may not be to long before we see $10,000,” a London-based trader said.

Major rhenium users include aero engine makers such as UK’s Rolls Royce (RR.L) and U.S.-based General Electric (GE.N) and Pratt Whitney, a division of United Technologies (UTX.N).

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