From Wall Street to Everett,
Wash.-where they're putting together the Boeing 787
Dreamliner-to the big aircraft forging shops around Los Angeles
and Boston, as well as the Tier 1 subcontractors of the
industrial heartland, anyone who makes, sells or works with
titanium is wondering "What kind of market cycle are we in
Probably more than any metal covered by
AMM that isn't traded on an exchange, there's none
whose history is more volatile than titanium, dependant in this
country largely on the highly cyclical aerospace industry for
65 to 75 percent of its business.
Even the best and most thoughtfully
considered titanium forecasts have a way of falling off track.
Hardly anyone predicted that the runaway popularity of titanium
golf club heads would almost single-handedly begin to pull the
industry out of the doldrums that accompanied the end of the
Soviet Union-whose collapse had thrust millions of pounds of
formerly unmarketed titanium onto the world market during the
recession of the early 1990s-only eventually for that
production to migrate pretty much to Asia. And no one, of
course, could have predicted the Sept. 11, 2001, terrorist
attacks that helped send the market into a tailspin.
By 2005, with inventories of scrap and
other raw materials at a low point and the industry awakening
to the likely impact of the Boeing Dreamliner and other
titanium-heavy commercial aircraft on future demand, and
bolstered by unprecedented infrastructure demand for industrial
and other non-aerospace grades from emerging economies, the
market was propelled into another surge that ran into 2008,
when it was tripped up by the global recession, 787 program
setbacks and growing oversupply of the metal.
Now, with the Dreamliner apparently back on
course after more than two years of delays (although its
suppliers continue to hold their collective breath) and build
rates for the fleet of "legacy" commercial airliners rising,
titanium deliveries are moving out as prices improve.
Speculation has begun on just where this trend will lead, and
whether people will once again be talking scarcity a year or
two down the road. Some argue that a replay of past shortages
and disruptions is unlikely, citing a continuing inventory
overhang in the supply chain as well as recent years' expansion
in global sponge capacity. They note, for example, that not
only Boeing but other consumers further down the chain have
moved to "close the loop" on revert, making sure that scrap
resulting from the ingots and mill products that they form and
machine returns seamlessly to the production cycle.
Will it be different this time? Stay