Demand for titanium, aluminum
and other metals is expected to be strong this year and even
stronger in subsequent years, based primarily on strength in
the aerospace industry.
Upward momentum in the aerospace
sector continues to mount as bullish assessments from the
worlds largest commercial aircraft builders send strong
signals of a continuing turnaround.
By 2013 and 2014, the ramp-up of
Boeing Co.s 787 "Dreamliner" and, by some estimates,
overall build rates on commercial transports will have
significantly surpassed the rates seen in 2010, industry
players said, providing an optimistic outlook not only for
titanium but also for aircraft-grade nickels, stainless steels
and aluminum alloys.
Fifty-nine customers from six
continents have placed orders for 870 Dreamliners valued at
more than $178 billion, making it the most successful launch of
a twin-aisle commercial airplane in Boeings history. A
spokesman for the companys Boeing Commercial Airplanes
subsidiary has confirmed that to ensure that the much-delayed
program meets its production targets, it plans to start up a
"surge line" for the 787 in Everett, Wash., in a
buildingadjacent to the existing final assembly
linepreviously used to produce the 767 airliner. The new
line, which wasnt part of the companys original 787
program, will help Boeing meet its delivery goals as it starts
production on a new version of the Dreamliner.
Boeing recently raised the build
rate on the titanium-heavy 787 from two to 2.5 per month, but
supply chain sources have been saying for months that they have
been producing at a higher rate than Boeings official
build rate. Earlier reports indicated that suppliers were
building parts and components at a rate of 3.5 planes per
month, but the Boeing spokesman acknowledged only that "some
areas of the supply chain are operating at higher rates" than
Boeings own monthly build rate.
Boeing has set a target of
building five Dreamliners per month by year-end and reaching 10
per month by late 2013 with the aid of its North Charleston,
S.C., facility, where a final assembly line will start up by
The spokesman called the Everett
surge line "a prudent step at this point in the program to
manage our way through some rate increases (and) with the 787-9
coming online." Assembly of the so-called Dash-9, a stretched
version of the existing 787-8 thats capable of carrying
about 40 additional passengers over a greater range, is
expected to begin in the fourth quarter.
Responding to the aerospace
activity, the titanium industry is prepared to meet any
challenges that demand might place on the sector, according to
International Titanium Association president Michael Metz
When titanium emerged from a
downturn in the past, it often struggled through a period of
supply-demand imbalance as it strove to supply the requirements
of resurgent markets. This time, as commercial aerospace
embarks on what is expected to be an era of prolonged growth at
the same time that non-aerospace industrial demand also
rebounds, the main question is: Can the industry handle it?
"Yes," Metz said, emphasizing that titanium companies today are
"well capitalized and theyve recognized the opportunities
that are out there to grow the business."
Virtually every major player in
the titanium production and supply chainfrom sponge
plants all the way downstream into melting and mill product
manufacturinghas invested in capacity expansion and
modernization over the past three to five years, he said. The
pieces are in place for a "significant growth period."
The jet engine market is likely
to account for a larger share of overall titanium shipments for
Pittsburgh-based Allegheny Technologies Inc. (ATI) this year in
the absence of a blockbuster infrastructure project and as the
airframe sector continues to await full acceleration.
Bob OBrien, president and
chief executive officer of Titanium Metals Corp. (Timet), said
the companys backlog at the end of 2011 was about 33
percent higher than a year earlier, and order activity has
increased in 2012. Commercial aerospace customers boosted their
purchasing throughout last year due to "increasing build rates
for legacy and next-generation models and replacement and
growth of inventory to support the estimated timelines for
fleet replacement and aircraft production," he said.
Dallas-based Timet also expanded
and extended long-term supply agreements with several
customers, in most cases extending them through 2017 or 2020,
OBrien said. These agreements have secured Timet a
"significant share" and major positions on such programs as
Boeings 787 and 737 MAX, the Airbus SAS A380, A350 XWB
and A320 NEO, and the Lockheed Martin Corp. Joint Strike
Fighter, he said.
Service Steel Aerospace Corp.
(SSA) is looking to boost its commitment to titanium as it
targets growth, with plans to increase inventories to support
growing consumption in such markets as commercial aerospace and
energy. "Anyplace we can move forward in round bar, block and
plate, were going to be interested in pursuing those
customers," Terry Wilson, president and chief operating officer
of the Tacoma, Wash.-based distributor, told AMM.
In March, SSA began moving into
a new facility in Fife, Wash., that will triple its presence in
the Pacific Northwest while providing room for future