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ATI sponge plant closure seen a non-issue

Jan 31, 2014 | 02:10 PM | Frank Haflich

Tags  Allegheny Technologies, ATI, Richard Harshman, titanium, titanium sponge, Frank Haflich


LOS ANGELES — Allegheny Technologies Inc.’s (ATI’s) permanent closure of its Albany, Ore., titanium sponge plant is seen having little impact on the market, industry sources said, as ATI’s newer Utah plant sponge facility continues to pursue premium-grade qualification.

ATI no longer sees "a reasonable likelihood of operating the Albany sponge facility in the future," Richard J. Harshman, chairman, president and chief executive officer, said during a recent quarterly earnings conference call (amm.com, Jan. 22).

"That plant wouldn’t have been a factor" in the sponge market if ATI kept it on the books, an executive at another company said, citing existing supply in both the United States and Japan, the largest import source. He maintained that the industry was looking for ATI to permanently "take the hit" on the Albany plant, which isn’t seen as competitive in a global market with a number of efficient producers.

The Albany plant, idled in 2009 due to slumping market conditions, has an annual capacity of 22 million pounds, while the capacity of ATI’s Rowley, Utah, plant, which started up in late 2009, is 24 million pounds per year.

Harshman pointed out that the Albany plant used the older acid-leach sponge process vs. the later-generation vacuum distillation employed at Rowley, which is "on track" to successfully complete the qualification program for premium-quality sponge in 2015. Others noted that low scrap prices over the past two years have made sponge less economical for certain aerospace alloys.

"As we look to the future in our strategic planning, it’s clear we see no reason for operating the Albany sponge facility," an ATI spokesman told AMM.

Premium-quality qualification involves not only sponge produced at Rowley but also downstream operations at other ATI operations, most prominently its Monroe, N.C.-based ATI Allvac Inc. unit, one of the larger U.S. producers of rotor-grade titanium products for the engine market.

The process dictates that ATI produce a certain volume of titanium sponge at Rowley "specifically for the qualification program," and requires this sponge to go through "all of our melt technologies"—electron beam, vacuum-arc remelt and plasma-arc melt—subsequently being made into a "defect-free" round bar, Harshman pointed out.

Rowley is currently running at 50 to 60 percent of capacity, the ATI spokesman said, but didn’t disclose how much sponge is being directed to premium-quality qualification and what portion to the industrial and standard aerospace markets for which it already qualifies.

ATI’s decision to shut the Albany plant leaves just two remaining domestic producers of titanium sponge metal: its Rowley plant, along with the Henderson, Nev., operation of Titanium Metals Corp., a subsidiary of Precision Castparts Corp., Portland, Ore.

Meanwhile, ATI’s titanium shipments in the fourth quarter declined 10.1 percent to 8 million pounds from 8.9 million pounds in the year-ago period. Shipments for the year were essentially flat at 37.3 million pounds vs. 37.6 million pounds in 2012. This includes both aerospace long products shipped by Allvac and flat-rolled products, along with the output of ATI’s Uniti LLC joint venture with Russia’s VSMPO-Avisma Corp. for commercially pure titanium for nonaerospace markets.

Pittsburgh-based ATI continues to pay a price for its premium-quality qualification effort, with its fourth-quarter results hurt by its "strategic decision" to use Rowley sponge instead of lower-cost titanium scrap for titanium mill products (amm.com, Oct. 25).

Editor's note: This story was updated Feb. 3, 2014. Due to an editing error, the story implied that ATI anticipated no market impact as a result of the permanent closure of its Albany, Ore., sponge facility rather than industry sources.




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