Flying is not as much fun
as it used to be. From the ever-decreasing size of airlines'
complimentary packets of peanuts to the introduction of
eye-popping fuel surcharges, much of the sense of excitement
and adventure seems to have gone from the whole experience.
After a tough couple of years, the
titanium industry could be forgiven for feeling a similar sense
of let-down. While airline passengers have a choice of things
to blame for their current woes-from security restrictions to
rising oil prices-titanium suppliers have a clear scapegoat for
sluggish prices and concerns over excess capacity Boeing.
That may seem tough on the giant
aircraft manufacturer, which has had plenty of problems of its
own in recent years. But the repeated delays to the company's
787 Dreamliner program, as well as pushbacks to the schedule
for Airbus' giant A380 airliner, are the reason that titanium
pricing remains in the doldrums while inventory levels are
steadily rising. A single Dreamliner requires around 250,000
pounds of titanium, so when Boeing cuts its projections for the
number of planes it will ship next year by over three-quarters,
as it has done, that's a tough blow for suppliers. It's not
surprising that titanium prices have fallen sharply since 2006,
although optimists will point out that current prices of around
$13 a pound for ingot are still far above the $5-a-pound levels
seen in previous downturns.
Sellers of titanium, who not so long
ago were commanding prices of $30 a pound, might disagree, but
it looks like the optimists are right. The longer-term outlook
for aerospace metals demand is good. Analysts estimate that
Boeing, Airbus and smaller aircraft makers have an order
backlog of as many as 6,000 planes, and there is little sign so
far that the airlines' current woes have led to a cutback in
orders. The credit crunch, record jet fuel prices and the
slowing global economy right now are problems for the airlines,
not the manufacturers. For aircraft producers to have a
guaranteed order book of up to six years ahead in today's
economic climate is, in the words of one analyst, "a very
That's good news for suppliers.
Aerospace metals is about more than just titanium Approximately
87 million pounds of nickel alloys were used last year in jet
engines built by the likes of Rolls-Royce and General Electric.
Engine construction will rise by more than 10 percent to around
9,000 units this year (many of which will go into business
jets, which are expanding their market share despite-or, more
likely, because of-the problems at commercial airlines).
The future even looks bright for
aluminum, which has seen its use in aircraft bodies come under
attack from the rise of lightweight carbon fiber composites.
Aluminum plate demand from the aerospace sector seems likely to
increase sharply in the next few years, while producers are
moving quickly to develop newer, lighter products such as
aluminum-lithium alloys that should help protect their market
So if the aerospace sector can ride out
its near-term problems, it looks set to remain a steady source
of growth for metals suppliers for years to come. It may not be
much of a consolation the next time you're stuck in a
three-hour delay at O'Hare, but the future of the industry is