MIAMI — The key raw materials that support titanium production—vanadium, molybdenum, chrome and niobium—are “completely dependent” on the performance of the steel industry, according to an official from Ametek Reading Alloys.
Given that the steel industry is expected to enjoy modest growth in 2017 and 2018 that could exacerbate tightness in those raw materials markets, the implications for the titanium industry are significant, Vincent Rocco, product manager for alloys and powders, told delegates at the Titanium USA 2017 conference on October 11 in Miami.
Vanadium is a critical ingredient in standard aerospace 6-aluminium/4-vanadium (6/4) titanium—which is the most widely used titanium alloy, for airframe, engine, industrial, consumer and medical applications, according to Rocco. However, the steel industry accounts for 93% of vanadium consumption, vs. the titanium sector, which represents only 4%, he said.
The commodity rout of 2015-16 eliminated about 13,000 tonnes of vanadium from global supply, and when environmental inspections curtailed Chinese vanadium production this past August, prices spiked, according to Rocco. As a result, the shortfall of vanadium is expected to reach 14,000 tonnes this year, he said.
On top of that, Grade 3 rebar standards in China are expected to be revised, which could increase vanadium demand in China by 30%, or 10,000 tonnes, according to Rocco. In addition, vanadium redox battery (VRB) technology—which requires “very large amounts” of vanadium—appears to be gaining traction after years of development, he said.
“Nothing is certain,” he said. “The market appears to be stabilizing, but there is little inventory in the system ... (and) little vanadium capacity that can be brought online in the short term.”
“We have what we have right now,” he added. “This could be a vulnerable situation.”
Prices for vanadium pentoxide stood at $8.25 to $8.5 per pound in-warehouse Rotterdam on October 6, down 6.1% to 7.8% from a range of $8.95 to $9.05 per pound on September 29, according to AMM sister publication Metal Bulletin’s latest assessment.
Molybdenum—another critical component used to produce titanium—also is facing a tight supply situation, according to Rocco.
“Like vanadium, significant supply was taken out of the system,” he said, explaining that molybdenum prices bottomed at the end of 2015, before significant supply was eliminated in 2016.
Although molybdenum is impacted by copper demand and production—given that roughly half of global molybdenum output is a byproduct of copper mining—it is mostly consumed by the steel sector, according to Rocco. More specifically, the full alloy steel and stainless steel subsectors each account for 21% of molybdenum consumption, while tool steels and carbon steels represent 10% and 8%, respectively, he said. In other words, steel is responsible for 60% of molybdenum consumption.
Factors driving the molybdenum market moving forward will be oil and gas price recoveries and a potentially dramatic increase in liquefied natural gas (LNG) exports and infrastructure, he noted. In addition, China now accounts for roughly 36% of world consumption by region, up from 12% in 2006, he said.
“Supply is currently tight,” Rocco said. The market is expected to be in equilibrium through 2020, but the International Molybdenum Association forecasts that molybdenum demand will increase 3.6% per year through 2024, he noted.
AMM's price assessment for canned molybdenum oxide decreased to a range of $8.40 to $8.60 per pound in-warehouse United States on October 5, dropping 1.7% to 1.8% vs. $8.55 to $8.75 per pound on September 28. Meanwhile, European prices for drummed molybdenum oxide stood at $8.35 to $8.50 per pound on October 11, flat vs. the prior week, according to Metal Bulletin’s latest assessment.
Niobium and chrome
Niobium and chrome are two other critical titanium ingredients that are heavily consumed by the steel industry, according to Rocco.
Niobium is almost entirely consumed by the steel sector—including structural steels (29%), automotive steels (25%), oil country tubular goods (23%), stainless steels (10%) and other steels and iron (7%)—totaling 94%, he said. The remaining 6% is consumed by titanium, niobium metals and other alloys, he added.
“Niobium production is highly concentrated,” with producer CBMM in Brazil controlling approximately 90% of global output, he said. “Demand will also grow as developing countries use more niobium in steel production.”
By comparison, 60% of chrome supply is consumed by steel production—stainless steel in particular, according to Rocco. The remaining supply is consumed by chrome plating and alloys (35%), refractories (3%) and chemical producers (2%), he said.
Stainless steel production is expected to increase at a rate of 4% through 2026, with most growth coming from China, according to Rocco. However, chrome supply from South Africa—14,000 tonnes of the total 30,400 tonnes—may be limited, Rocco said, noting that no new mines or byproduct concentrator plants are being planned there.
Alumino-thermic chromium prices remained flat at $3.95 to $4.05 per pound in US warehouses on October 5, according to AMM’s latest assessment.
Implications for titanium
The markets for key titanium raw materials are dependent on the requirements of the steel industry, according to Rocco.
On top of forecasts for modest growth in 2017, next-generation steels will use more vanadium, molybdenum, niobium and chrome, which could significantly affect their supply levels and hurt the titanium industry, he said. Indeed, titanium prices already are considered relatively high, which could affect its usage going forward, according to Boeing.
“An understanding of the drivers and direction of the steel demand are vital in developing plans to ensure adequate supply of critical raw materials,” Rocco said.