UPDATE 1-Chile’s Molymet plans to sell rhenium on spot market

* Most rhenium sold on long term contracts

* Major rhenium consumers are aero engine makers

By Pratima Desai

LONDON, Aug 27 (BestGrowthStock) – Chile’s Molymet is planning to
sell some of its rhenium output on the spot market to make spot
prices more representative, a source at the world’s largest
producer of the aerospace material said.

This would be a major change in the market where most of the
rhenium produced is sold on long-term contracts.

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

“We are studying what percentage of our sales will be sold
on the spot market,” the source said. “We are a big player it is
reasonable we should say something about the spot price.”

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.

Rhenium has the second highest melting point — 3186 degrees
celsius — of any metal. It is a byproduct of molybdenum, which
itself is a byproduct of copper, from mines in Chile, United
States, Kazakhstan and Poland.

The need for fuel efficieny, more environmentally friendly
aeroplanes has meant strong demand for rhenium, which helps
engines reach higher temperatures. It is also used to make
industrial turbines.

Traders say copper producers are asking for credits for
rhenium in the molybdenite processed by Molymet. That is why
Molymet is looking at sales on the spot market.

“Either they want the rhenium units back, minus yield loss,
or they want payment via the published price less discount,” a
UK-based minor metals trader said. “In both instances the old
fixed price sales system cannot work.

Major consumers of rhenium are aero engine makers such as
U.S.-based General Electic (GE.N: ), United Technologies (UTX.N: )
Pratt & Whitney and UK-based Rolls Royce (RR.L: ).

Rhenium pellets are currently trading at around $4,500 a kg
on the spot market, up from levels above $3,700 in January, but
down from record levels above $10,000 a kg in July 2008.

(Reporting by Pratima Desai;editing by William Hardy)

UPDATE 1-Chile’s Molymet plans to sell rhenium on spot market