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Titanium market eyes 2013 price pickup

Keywords: Tags  titanium ingot, titanium outlook, titanium, titanium prices, Boeing, 787 Dreamliner, Frank Haflich

LOS ANGELES — The titanium spot market is looking to next year for pricing improvement as ingot prices show signs of slight softness as 2012 winds down.

Prices for 6 aluminum/4 vanadium standard aerospace ingot have settled in a general range of $10 to $11 per pound, down about $1 to $2 per pound from levels seen in the first half of the year.

Some market sources noted that it’s not unusual for spot ingot prices to dip in December, when certain producers seek to boost their end-of-year cash flow. "I’ve seen no uptick in volume. People are continuing to fight for market share," one industry source said.

"Ingot always seems to be more available at the end of the year," one buyer said, pointing out that low scrap prices and continuing inventory reduction at Chicago-based Boeing Co. are helping to keep a lid on any upside.

Delivery lead times are estimated as short as six to eight weeks, and even about four weeks when material is already on the floor.

Most titanium shipped in the United States is now part of long-term supply deals with large aerospace buyers, which are priced on various economic and commodity indices that normally don’t reflect the near-term fluctuations more common in the spot market, some market sources noted.

"We don’t see the market as soft. We see it as solid," a producer of downstream mill products said.

"I think it’s significant that ingot pricing hasn’t deteriorated as much as during past downturns, and hasn’t declined nearly as much as scrap prices," another market source said.

Nevertheless, at the start of 2012 several distributors had expected both demand and pricing to rise significantly in the second half of the year, and some expressed disappointment that they had spent too much of their time in the final months of the year fretting about carrying too much inventory.

However, with commercial aircraft backlogs remaining strong and the titanium-heavy Boeing 787 Dreamliner recently reaching a build rate of five per month—with a target of 10 per month by the end of 2013—some market participants think it isn’t unrealistic to expect a pickup in the first half of 2013.

"A month ago, some suppliers were willing to give fixed pricing to June (of 2013), and now they’re only giving it to March. So maybe now they have the idea that demand and prices are going up," a buyer of melted products said.

"We’re seeing a little more reluctance at mill level for selling to us at firm, fixed pricing," a distribution executive agreed.

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