ANALYSIS-Super hot metal rhenium may reach "platinum prices"

By Jan Harvey

LONDON, July 10 (Reuters) - The price of aerospace metal rhenium, which has jumped almost 10-fold in five years, looks set to go even higher as supply fails to keep up with demand.

The silvery-white metal, used increasingly in aircraft engines and oil refineries because it can withstand very high temperatures, faces a major supply deficit as new production fails to fill a gap left by dwindling stockpiles.

High prices are attracting new investment but new supplies of the metal will take a long time to reach customers.

Traders say rhenium spot prices, which have rocketed to as much as $11,250 a kg against $1,110 in 2003, could go much, much higher as plane makers and refiners look for every last ounce.

"Theoretically, it can achieve platinum prices," said Andras Szep, general manager of metals trader Sekom. "Perhaps not $2,000 an ounce, but $1,000 an ounce is quite an imaginable price for rhenium."

Rhenium prices are now at around $351.50 an ounce, compared to $1,978 an ounce for platinum, so there's a long way to go.

But with demand far outstripping supply, another big jump looks possible. Global supply at around 50 tonnes a year roughly equals demand of just the top three users, industry sources say.

Until recently the deficit was met through draw-downs in stockpiles of the metal, chiefly from Kazakhstan. But these stockpiles are now largely depleted.