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Demand, price upturn not ahead for titanium

Keywords: Tags  titanium, RTI, Dawne S. Hickton, aerospace, military, spot market, Boeing Co., Frank Haflich

LOS ANGELES — The spot titanium market has failed to realize an anticipated mid-2012 upturn in demand and pricing, and few are willing to predict when it could start.

Despite near-record airliner production rates, a number of factors helping to keep a lid on pricing.

"We were ramped up earlier this year to see a lot more business by this time than we’re seeing today," one distributor said.

"There doesn’t seem to be much destocking going on," according to another market source.

Standard aerospace 6 aluminum/4 vanadium ingot has dropped by $1 per pound or more on the spot market since late 2011 and into this year, and now stands in a range of $10.50 to $11.50 per pound, market sources said. Commercially pure Grade 2 plate for non-aerospace industrial applications has also eased by about $1 per pound.

The failure of prices to strengthen can be partially attributed to the combined impact of declining requirements in the military sector and a continuing overhang of the inventory that supports Chicago-based Boeing Co.’s commercial transport production.

Additionally, some people are only now beginning to appreciate the continuing effect of long-term supply agreements that have come to dominate an increasing portion of titanium shipments. Pricing under these contracts not only is typically less volatile than spot, but also is based on raw material and economic indices that this year have either barely moved or have softened.

Moreover, industrial activity is also seen as quiet despite a hoped-for continuation of the partial rebound in infrastructure business, particularly desalination, that occurred in 2011.

"Inquiries are strong, but we haven’t seen a lot of orders," one supplier to the industrial sector said.

"For titanium people, the industrial market just hasn’t panned out the way they expected," another market observer said.

Few are predicting a significant pricing upturn. In May, Dawne S. Hickton, vice chair, president and chief executive officer of Pittsburgh-based RTI International Metals Inc., said that if pricing were to change through the year, it would probably "moderate down slightly."

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