Rhenium – updated
A brief look at the pie charts for rhenium – 50mt primary supply/ 65mt total demand (a market in deficit) – looks deceptively simple.
And yet prices have been steadily falling – why?
The only sensible explanation, it would appear, is that the last few years of reverting and recycling have brought efficiencies that previously did not exist. The once glaring gap between supply and demand has been made up by tributaries and streams of saved units, rescued from the obscurity that allowed so much rhenium in the past to be wasted.
Meanwhile, in rhenium’s main market – aerospace – delays to the production-lines of the Boeing 787 (Dreamliner) and Joint Strike Fighter (JSF) have pushed out rhenium consumption and reduced nearby pressure. Stocks of un-substitutable rhenium, taken in by super alloy makers or aero-engine makers (for free issue), were too high in relation to present usage.
For these reasons, prices for rhenium metal on the spot market languish now either side of $1100 per lb / $2425 per kg while long term supply from multi-year suppliers such as Molymet of Chile, KGHM Ecoren of Poland and Climax of USA, are sufficient to cover present work in progress. Prices for basic (impure) APR are below $2000 per kg Re while prices for catalyst grade APR are steady at $3000-3200 per kg Re, reflecting the irregular spot buying of the catalyst industry.
However, it must be said that the lowest prices for 10 years, which we are now witnessing, have within them the seeds of recovery as recycling becomes unprofitable. Already, Neo Materials in Canada, has ceased recovery of rhenium from complex nickel base alloy because the OEMs, upon whom they depended for feed, could not guarantee the throughput to make the business viable. It is said Neo’s output from recycling never exceeded 2mt of Rhenium per year, although their capacity was so much greater. Meantime, the cost to recycle these most difficult of alloys, taking into account equipment and non-amortized costs are estimated to be $2000 per kg Re. So it is not too far-fetched to conclude that we have reached the level where Rhenium units will once again be wasted, leading to a widening of the deficit between primary supply and growing demand.
When full production of the Dreamliner and something like the intended speed of retirement of old engines and planes eventuates, then the tightness will re-occur.
All markets need to go through peaks and troughs and there is no reason why Rhenium, despite its small size, should not do the same as alumina, iron ore, cobalt or copper.
Finally, here are two updates that those involved might want to take note of:-
ZhezkazganRedmet, who traditionally processed rhenium generated by Kazakhmys (the copper producer in Kazakhstan), only made about 2.7mt of Re in APR so far in 2013. And this is predicted to reduce to zero in 2014 until end 2017 while re-furbishment of Kazakhmys’s smelter takes place.
Codelco re-confirmed it will build a new molybdenum roaster at Mejillones in Chile and aims to produce 2-3mt of Rhenium by-product. However, it will be a few years before the first kilos emerge.
I do not mind admitting to being perplexed that rhenium prices are as low as they are. But who ever made money buying at the top of a market?
Anthony Lipmann©
08/11/13
Posted on MetalPrices.com