UPDATE 1-Aero engine metal rhenium jumps on supply concerns


LONDON, March 31 (Reuters) - Rhenium prices rose over the last week, as earthquakes in top producer Chile in the last month highlighted the heavy dependence on the South American country for supplies.

Prices of refined rhenium pellets, widely used in heat-resistant alloys by the aircraft industry, were quoted at between $4,000-$5,200 per kg, according to European market sources, up from around $3,600/$5,000 per kg last week.

"We have been more active in rhenium in the last month and especially last two weeks than for a long time," a trader said. "There is no doubt that the Chile earthquake awakened the aero engine makers and super alloy makers to their dependence on ... one country."

Most of the rhenium mined each year comes as a by-product from molybdenum mines in the Chile, United States, Kazakhstan and Poland.

Molibdenos y Metales SA of Chile (Molymet) is the world's largest producer of primary rhenium, accounting for more than 50 percent of supply.

A massive quake in late February killed hundreds of people in Chile, toppling buildings, shattering key highways and downing power lines. [ID:nN02209214]

Although there was little long-term disruption to mining production, power issues remain after blackouts forced some mines to halt output. [ID:nN14147794]

At the end of 2009 the price for rhenium APR basic grade, the raw material behind rhenium metal production, hit $2,500 per kg, while rhenium pellet hit $3,600 per kg from above $11,500 at their peak in July 2008.

"The old days when Molymet would sell rhenium on 5-10 year long term fixed price contracts is over," the trader added. "This means that the spot market ... now determines price."

Rhenium, unlike gold, or more commonly traded industrial metals like copper and tin, avoided the interest of speculative investors during the commodities boom of 2008, and so largely escaped the heavy liquidation that later hit other materials. Not traded on an exchange, indicative pricing for the silvery-white metal is left to vendors such as Thomson Reuters and Metal Bulletin, where reporters collect prices from traders, producers and consumers and publish a consensus.

(Reporting by Michael Taylor; editing by Amanda Cooper)



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