Analysts see inventory workdown pivotal to titanium's price recovery

Jan 01, 2010 | 10:00 AM | Frank Haflich

On Wall Street and its outposts, the clues to a turnaround in aerospace titanium lie in the global economy, the airlines' ability to maintain their financial health and aircraft delivery schedules, and signposts unique to the titanium market—not the least of which is the prospect of drawing down the supply chain's big inventory overhang.

With economic indicators pointing toward an eventual, if fitful, return to growth, the worst fears about a collapse in commercial aerospace demand probably won't be realized, although it might take a while before pre-recession optimism is regained.

"Our expectation is that this global recovery doesn't gain traction until late next year," John Mothersole, IHS Global Insight Inc.'s senior analyst in Washington, said.

While airlines have done a good job of managing capacity during the recession, the result has been to "rationalize" their volume as opposed to adding new capacity. "This doesn't help (to bring in) new orders," Mothersole said of airline economizing and cost cutting. However, it also implies "there's still room" for airlines to grow going forward.....