World titanium sponge supplies are limited; US DLA to be depleted

World titanium sponge supplies are limited; US DLA to be depleted

Washington (Platts)--14Jun2005


World titanium sponge supplies are limited, and titanium producers have
"aggressively introduced buyback programs" with customers for their scrap,
said James Hayden, vice-president of RTI Alloys, a subsidiary of RTI
International Metals. Speaking at the Platts Steel and Ferroalloys conference
in Pittsburgh, Pennsylvania, Hayden said "this practice has been implemented
with many forgers, machine shops and aircraft manufacturers like Boeing and
Airbus." 

US Defense Logistics Agency stockpiled sponge releases, which began in the
1990s, will no longer supplement scrap streams. DLA stockpiles will be
permanently depleted by the end of 2005, he said. During the past decade,
producers Oremet and RMI Titanium in the US, Deeside in the UK and Showa Dinko
in Japan closed sponge plants, eliminating nearly 19,000mt of capacity.

And as there is limited production, "with cyclical aerospace programs keeping
sponge producers in a precarious position, when considering the necessary
return on investment to increase sponge capacity." But Hayden was optimistic
that a sustainable aerospace recovery will improve titanium scrap generation.

Commercial aerospace began to show early signs of recovery in late 2003 and
continued to strengthen through 2004. According to The Airline Monitor, the
combined production of large commercial aircraft by Boeing and Airbus is
forecast to reach 680 aircraft in 2005, 760 aircraft in 2006, 790 aircraft in
2007 and 815 aircraft in 2008. "Titanium melters will continue to compete
aggressively for titanium scrap until additional sponge capacity comes on
stream," said Hayden. Recent announcements by Sumitomo, Toho and Timet
indicate they will increase sponge capacity begining in October 2005 and
extending through the first quarter of 2007. 

"Recent declines in ferrotitanium prices are attributed to seasonal increases
in ferrotitanium shipments from Russia, recent global reports of softening
steel demand and traders liquidating ferrotitanium positions," added Hayden.
He went on to note that as a relative constant throughout the late 1990s and
early this century, worldwide steelmaking and specialty alloying applications
consumed about 45,000-50,000mt/year of titanium metallics in the form of
ferrotitanium, sponge or processed scrap. 

Worldwide titanium ingot production during the last decade has consumed from
61,000mt to 95,000mt of titanium scrap and sponge annually. "The range
reflects a cyclical peak market in 1997 and the trough in 2002-2003," said
Hayden. "Growing aerospace and military applications for hearth-melted
titanium have and will continue to compete for small titanium scrap solids and
turnings, which were once exclusively used for ferrotitanium and specialty
alloy applications."

This story was originally published in Platts Metals Alert
http://www.metalsalert.platts.com

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