LOS ANGELES The value of
benchmark Japanese titanium sponge shipped to the United States
rose in the fourth quarter compared with the same period a year
earlier, but the market pressures contributing to the increase
might now be in reverse.
The value of Japanese sponge
arriving during the final three months of 2012 averaged $14.846
per kilogram ($6.73 per pound), up 14.6 percent from $12.959
per kg ($5.88 per pound) a year earlier, according to U.S.
Commerce Department data compiled by the U.S. Geological Survey
Japan is by far the leading
source of outside sponge for U.S. producers, accounting for
14,400 tonnes (31.75 million pounds) during the first three
quarters of 2012, or 53.7 percent of total imports of 26,800
tonnes (59.08 million pounds). Kazakhstan supplied 24.7 percent
of U.S. imports of the material during the same period,
according to USGS estimates.
The 2012 price increase was
generally attributed to the higher cost of the feedstock ore
that contains the titanium dioxide used to produce sponge. The
price of high-grade sponge feedstock has been on a roller
coaster since 2009, with rutile prices rising to as high as
$2,500 per tonne last year from an estimated $500 to $600,
helping to send sponge prices higher.
But rutile has retreated to
about $1,300 to $1,400 per tonne in the first quarter of this
year, according to industry sources.
Moreover, sponge demand
reportedly is off as titanium scrap prices continued to decline
through last year and into 2013, raising the consumption of
competitive revert material, industry sources pointed out.
In large part, the decline in
rutile prices reflects a drop in worldwide demand for pigment,
by far the largest consumer of titanium dioxide at 90 to 95
percent of worldwide usage compared with just 5 percent for the
titanium metal that is produced from sponge.
China has been the major
influence on pigment demand over the past few years as its
requirements surged in 2011, triggering fears of a shortage and
what one observer called an "unprecedented" inventory buildup.
That later turned into massive destocking, according to
observers. But while most of that inventory might have been
worked down, restocking has yet to start.