The rising price of oil and the aviation industrys
need for lighter, more-fuel-efficient aircraft are brightening
the outlook for the global titanium industry.
At any given time, between 40 and 60 percent of the titanium
metal shipped globally is used in aerospace and aviation,
according to Michael Metz, president of the North American arm
of the worlds largest titanium metal producer,
Russias VSMPO-Avisma Corp.
And as the titanium industry heads into the final quarter of
2012, the aviation market looks especially promising because
the worlds airplane builders
are introducing new aircraft that have the potential to
transform civil aviation. Boeing Co. has rolled out its new 787
Dreamliner and already has more than 800 orders for the
fuel-efficient twin-aisle aircraft. Airbus SAS, the major
European aircraft manufacturer, is introducing its wide-body
A350 family of aircraft in the second half of 2014. Both the
787 and the A350 rely heavily on carbon fiber in their airframe
Theres a lot more titanium used in carbon-fiber
aircraft, said Metz, who is president of the
International Titanium Association. Theyre much
A typical Dreamliner uses an estimated 180,000 to 225,000
pounds of titanium, which has titanium producers anticipating
increased orders into 2013 and 2014. In our world,
Metz said, the airplane market right now is pretty
The 787 and A350, which can carry as many as 250 to 300
passengers, depending on configuration, will serve as
replacements for the Boeing 767 and the Airbus A330 when they
begin dominating airline fleets later this decade.
Much of the spike in new aircraft development has been
spurred by oil prices that since 2010 have consistently stayed
above $100 per barrel. Less than 10 years ago, oil was
$25 a barrel, and all of the fleet in use today was designed
more than 10 years ago, Metz said. The airlines
just cant compete (using) older-technology
Metz said that aircraft manufacturers have been using more
titanium in the production of newer models of older aircraft
ever since the price of fuel started rising. A current Boeing
737, the workhorse of many airlines such as Dallas-based
Southwest Airlines Co., is much more fuel-efficient than a
classic 737 thanks to the increased use of titanium.
High-strength, low-weight titanium parts also will be important
in the new Airbus A320neo, due out in 2015.
Boeing currently is producing three-and-a-half 787s per month,
but the Chicago-based aircraft manufacturer has told analysts
it expects to increase production to 10 per month by next year.
For Metz and others in the titanium metal business, thats
a significant increase in demand.
While the aviation industry is a
promising growth market for titanium metal, it is hardly the
only source of demand. Corrosion-resistant
applicationschemical processing plants, water
desalinization units, and nuclear and fossil-fuel electric
generating stationsare the next biggest market for
titanium metal. But the corrosion-resistant market has a more
problematic outlook as 2012 enters its last quarter, Metz said.
The corrosion-resistant market is more dependent upon the
chemical process industry, and that is not experiencing any
kind of robust growth.
Metz said that the industrial market for titanium metal took a
pretty big hit in the 2008-09 recession. We are making
less houses, less cars, less of a lot of things than we did
four or five years ago, he said. There is probably
some titanium in that manufacturing plant that made those
The electric power generation industry is a major consumer
of corrosion-resistant titanium, but while the worlds
power consumption grows each year, not all of that power comes
from nuclear or fossil-fuel generating units that require
titanium metal. Metz noted that the United States and many
European countries are encouraging the use of so-called
green energy, such as solar power and wind
turbines, and few alternative-energy technologies are major
consumers of titanium.
An even bigger threat to titanium is the slowdown in the
market for baseload coal-fired steam electric generating plants
that produce more than 750 megawatts of power per unit.
Chinas recent slowdown has impacted the market for
coal-fired generation in one of the worlds biggest
economies, and worries about the role of coal in global warming
have hurt the market for baseload coal units in the United
States and other developed countries, where increasing
regulatory burdens have hampered utilities efforts to add
such units. For example, Charlotte, N.C.-based Duke Energy
Corp.s baseload coal gasification unit near Edwardsport,
Ind., is more than $1 billion over construction estimates and
is still not online, in part due to added regulatory
Domestic utilities have been attempting to add generation
with combined-cycle gas turbine units that typically are rated
in the 100-megawatt range and leave a considerably smaller
carbon footprint than coal. The discovery of major new shale
gas deposits in the United States is creating the potential for
gas-fired generation to replace coal-fired generation.
But Metz pointed out that most of the replacement gas energy
plants are much smaller and will take decades to supplant coal.
There is some skepticism about shale gas in our
industry, he said. Are we going to move from 10
percent of the market today to the 70 percent of the generation
market that coal has? Thats not likely anytime
Another major utility consumer of titanium metal is the
nuclear power industry. But the failure of the nuclear plant at
Fukushima during the March 2011 earthquake and tsunami has
thrown the future of nuclear power into question.
Given the problems afflicting the baseload fossil-fuel
electric power generation market and the chemical processing
market, current activity is definitely lower than in
recent years, Metz said, especially when its
compared to the build rates for the aviation marketplace.
And the corrosion-resistant and aviation markets together
represent approximately 80 percent of the customer base for
But there are alternatives. Some 20 years ago, a recession
in the aerospace industry convinced titanium producers to
actively pursue other markets, including the health-care and
even sporting industries. Producers quickly began research to
position titanium in what it called second-tier
The use of titanium in a wide variety of medical
applicationship and knee replacements, dental implants,
artificial hearts, trauma systems and the likeis a good
example. Medical-grade titanium alloys began replacing
stainless steel and aluminum for surgical procedures and
implants in the 1990s; today, as many as half of all orthopedic
implants are made of titanium.
And with an estimated 8 million to 10 million joint
replacement surgeries performed in the United States over the
past decade, those numbers can add up. One major orthopedic
medical device manufacturer, which reported recently that
anywhere from 0.5 to 2 pounds of titanium are used in a typical
implant, consumes approximately 800,000 pounds of titanium each
yearroughly what Boeing consumes in a week for 787
Medical application is a nice, growing part of the
market, and there is good stuff happening, Metz said, but
noted that it accounts for 5 to 10 percent of the market
at besta far cry from the aviation
industrys 40 to 60 percent.
Lightweight with a high strength-to-weight ratio and the
ability to absorb shock and dampen blows, titanium also is used
to make bicycles and sports equipment such as baseball bats,
hockey sticks and golf clubs.
Titanium is generally used where economics give you a
performance advantage, Metz said. In airplanes,
its the strength-to-weight ratio. In industrial
applications, its life cycle costing. When you swing a
titanium golf club, the ball goes further. You are paying for
performance at the end of the day.
From a macro perspective, Metz is ending his term as ITA
president feeling optimistic about the industrys future,
particularly based on the strength of the resurgent aircraft
construction industry. All of the major players in the
business are showing profits, he said. The
industry, in general, is healthy. There is a lot of capital
investment on the strength of potential growth. And there is
room to expand production in existing facilities.