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Secondary rhenium supply growth to cater for new demand: Roskill

https://www.chemnet.com   Jul 03,2015 Platts
Rising demand for rhenium in aero engines is likely to be satisfied by increasing supply of secondary rhenium contained in "engine revert" produced from end-of-life gas turbine parts, UK-based consultancy Roskill Information Services said Thursday.

"At the recent Paris Air Show the big three aero engine manufacturers, GE Aviation, Rolls-Royce and Pratt & Whitney, announced billions of dollars of new sales," Roskill said.

"This was excellent news to rhenium suppliers since rhenium consumption is dominated by the nickel-based superalloys that are used in gas turbine aero engines and also, to a lesser extent, in industrial gas turbines."

Since 2005, total rhenium demand from the superalloy sector has grown at a compound annual growth rate of 7% and in 2014 accounted for 78% of total rhenium demand.

But while a straightforward correlation between gas turbine construction and rhenium demand held true in the past, "today the picture is less clear due to a mature recycling industry and the increasing quantity of reprocessed end-of-life gas turbine parts consumed as 'engine revert,'" Roskill said.

PRIMARY SUPPLY

Rhenium primary supply is almost entirely as a byproduct of copper or molybdenum production and is highly inelastic, the consultancy noted, adding that since 2006 primary supply has averaged 45 mt/year and been broadly stable.

Secondary supply of rhenium, as pure metal or ammonium perrhenate, rose considerably from 2007 to 2012, in response to high rhenium prices and a large investment in new recycling capacity.

"However, since 2013, against a backdrop of steadily falling spot prices, several recyclers have experienced challenging economic conditions and as a consequence production of secondary rhenium metal and APR has fallen slightly," Roskill said.

"The most significant and disruptive development in rhenium supply has been the rapid increase in superalloy 'engine revert' produced from end-of-life gas turbine parts," it said. "The use of engine revert as meltstock for new batches of superalloy has reduced demand for primary or recycled rhenium metal and this in turn has depressed rhenium spot prices."

Platts weekly Dealer rhenium assessment currently stands at $2,450-2,800/kg, down from highs above $11,000/kg in 2008.

The development of the engine revert supply chain has provided the superalloy industry with a significant degree of control over their rhenium input costs and has reduced their exposure to the spot market, the company said.

Demand for rhenium is expected to experience a period of strong growth between 2015 and 2018 followed by stability through to 2020, Roskill said.

"Demand growth for the forecast period will average 6%/year and reach about 85 mt/year. Superalloy turbine parts for aero engines and industrial gas turbines will remain by far the largest end market for rhenium at over 80% of total rhenium consumption," it said.

On the primary supply side there are no rhenium projects that are expected to contribute a significant net increase in rhenium availability within the forecast period, with the possible exception of production re-starting in Kazakhstan, Roskill said.

RECYCLING

The rhenium recycling industry -- the market's swing producer -- "experienced considerable capacity growth when rhenium metal and APR spot prices were high, but is now squeezed between low spot prices and relatively high scrap prices," the consultancy said.

Several recyclers have reduced their operations, but should prices rise again recycling activity will increase once more, Roskill said.

Meanwhile, the increasing supply of engine revert is expected to continue over the next decade, echoing the growth in the use of rhenium-containing alloys in aero engines since the late 1990s, albeit after a delay of over a decade, it suggested.

"The story of the rhenium market since 2008 has been that of a small group of rhenium consumers from the superalloy sector (aero engine manufacturers and superalloy producers) systematically increasing their control over rhenium supplies, not for anti-competitive reasons, but in order to stabilise their input costs and reduce their exposure to a low volume, but essential, raw material," Roskill said.

"Despite past volatility, the future market for rhenium is expected to be more stable, largely as a result of increasing quantities of engine revert becoming available."
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