LONDON, July 2, 2015 /PRNewswire/ --
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. 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 (IGT).
Gas turbines are some of the most technically accomplished and
complex machines ever created, but despite considerable effort by
engine manufacturers there is currently very little substitution
potential for rhenium-containing superalloys in the hottest parts
of the most powerful gas turbines. Since 2005 total rhenium demand
from the superalloy sector has grown at a CAGR of 7% and in 2014
accounted for 78% of total rhenium demand.
However, 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'.
Primary and recycled rhenium supplies stable,
'engine revert' increasing
rapidly
Roskill's 5-year outlook covers the viability of new projects
coming on-stream, the supply of material from existing and
secondary sources, different scenarios for demand, and the
relatively probability of optimistic and pessimistic price
forecasts.
Rhenium primary supply is almost entirely as a by-product of
copper or molybdenum production and is highly inelastic; since 2006
primary supply has averaged 45tpy and been broadly stable.
In 2014 Chilean refineries produced 40% of primary rhenium from
a combination of Chilean and imported molybdenum concentrates. The
USA is the second largest producer
of primary rhenium at just under 20% and other important sources of
rhenium included Poland and
China. Kazakhstan's state-owned rhenium refinery,
historically a major rhenium producer, produced very little in 2014
due to a lack of raw materials.
Secondary supply of rhenium, as pure metal or ammonium
perrhenate (APR), increased 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.
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. 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.
The increased availability of engine revert has been supported
by the trend in the aero engine market away from selling engines
and towards selling pay-by-the-hour engine service agreements.
Service contracts close the loop on scrapped engine parts, thereby
offering engine manufacturers the opportunity to produce engine
revert 'in-house'.
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. In 2014 engine revert was a relatively open supply
chain, but it is likely to become an increasingly closed loop as
superalloy manufacturers seek to retain ownership of their rhenium
units throughout the life cycle of their gas turbines.
Looking ahead: strong superalloy growth met by increased
quantities of engine revert
Demand for rhenium will experience a period of strong growth
between 2015 and 2018 followed by stability through to 2020. Demand
growth for the forecast period will average 6%py and reach about
85tpy. 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.
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. In Chile the state-owned mining company, Codelco,
is constructing a plant at Mejillones which could recover up to
6.6tpy of rhenium from late 2015 onwards, but this plant, called
Molyb, will use feed material that would have otherwise been
treated by Molymet.
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. Several recyclers have reduced
their operations, but should prices rise again recycling activity
will increase once more.
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.
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. 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.
Roskill's latest rhenium report provides an in-depth look at an
industry that little information is otherwise available on, and is
dramatically more comprehensive than its previous editions. This
new report provides a detailed analysis of supply, demand, trade,
and prices, complete with detailed historical and forecast data,
geared specifically to the needs of industry participants, traders
and investors.
Roskill's new Rhenium: Market Outlook to 2020 report contains
full estimates for 2014, profiles on major producers and projects,
an assessment of key market trends and an outlook for supply,
demand and prices to 2020.
This latest edition is available at a price of £5500 /
US$8800 / €6900 from Roskill
Information Services Ltd, 54 Russell Road, London SW19 1QL ENGLAND. Tel: +44-20-8417-0087, Email:
info@roskill.co.uk Web: http://www.roskill.co.uk/rhenium
.
Note to editors
Roskill Information Services Ltd. of London, UK is a leading provider of
multi-client and bespoke market research services to the minerals
and metals industry.
The new rhenium report contains 174 pages, 68 tables and 40
figures plus an appendix of international producer specifications.
It provides a detailed review of the industry, with
subsections on the activities of the leading producing companies.
It also analyses consumption, trade and prices.
For further information on this report, please contact
Robert Baylis, rbaylis@roskill.co.uk
or +44-20-8417-0087.