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Japan sponge makers shift to low-grade input

Keywords: Tags  titanium sponge, titanium feedstock, rutile, Osaka Titanium, Titanium Metals, Henry Seiner, Frank Haflich

ATLANTA — Japanese titanium sponge producers, caught between high feedstock prices and titanium markets that have fallen below expectations this year, are shifting toward lower-grade feedstock in an attempt to reduce their costs, according to the president of Osaka Titanium Technologies Co. Ltd.

Shozo Nishizawa, who also is president of the Japan Titanium Association, told the International Titanium Association conference in Atlanta that Japan’s sponge industry has shifted from using only high-grade titanium dioxide (TiO2) in 2010 to approximately 50-percent mid- to low-grade TiO2 to produce sponge in 2012.

"Until 2010, Japanese producers were using high-quality feedstock," Nishizawa said, referring to titanium dioxide with a purity of 94 to 96 percent. "But since 2012 we have been making great efforts to adapt facilities for low- and middle-quality feedstock," resulting in TiO2 with 90- to 92-percent purity.

Starting in 2011, certain high-grade feedstock prices have skyrocketed for Japanese producers, the single-largest source of outside sponge for U.S. titanium mills, accounting for a little over half of total sponge imports in the second quarter of this year, according to the U.S. Geological Survey.

At least one Australian producer of high-grade rutile and synthetic rutile raised its prices by 70 to 90 percent in the second half of 2011 and the first half of 2012, although most observers don’t believe any subsequent increase, if it occurs, will match those hikes.

Henry Seiner, vice president of planning and materials for Titanium Metals Corp. in Toronto, Ohio, noted at the conference that different grades of feedstock have "appreciated at different rates" over the past three years. High-purity feedstock is up four to five times while "less-pure" grades such as slag are up three times, he said.

Along with Toho Titanium Ltd., Osaka Titanium is one of Japan’s two major sponge producers. The country’s sponge capacity has jumped to nearly 70,000 tons this year from just over 40,000 tons in 2009, according to Nishizawa.

However, he said shipments by the country’s producers of titanium mill products, which were up 40 percent in 2011 due primarily to heavy demand from desalination projects, have been down "sharply" this year from earlier expectations.

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