LOS ANGELES After nearly
doubling during the past three years and climbing nearly 17
percent in 2012, global output of titanium sponge is expected
to fall 9.3 percent this year, with Japanese producers bearing
the brunt of the cutback, according to UST Kamenovgorsk
Titanium & Magnesium Plant (UKTMP).
Heavy inventories and stiff
competition from abundant supplies of low-priced scrap are
among the leading reasons for the years expected decline,
Sylvain Gehler, chairman of the Kazakh producer, said at the
International Titanium Associations recent Titanium
Europe conference in Hamburg, Germany, and in a telephone
interview with AMM this week.
Overall worldwide output is
expected to fall to 213,700 tonnes (about 471.1 million pounds)
from an estimated 235,600 tonnes (about 519.4 million pounds)
Gehler, who also is managing
director of Brussels-based Specialty Metals Co., said that
fears of a shortage in titanium feedstock and slag were
partially responsible for heavy sponge purchases by consumers
last year, when titanium raw material prices shot up due to
strong demand from the pigment industry, the largest consumer
of titanium dioxide. At the same time, however, melters took
advantage of low scrap prices, leaving "expensive sponge still
in stock at the end of 2012."
He pointed out that, following a
31.3-percent drop to 124,675 tonnes in 2009, global sponge
output shot up 89 percent in the following three years.
While most of the worlds
major sponge plants will be forced to "adjust" production this
year, most pressure to reduce output will fall on producers in
Japan, where Gehler expects the decline to be among the
worlds largest to about 50,000 tonnes (110.2 million
pounds) from an estimated 63,400 tonnes (139.8 million pounds)
In contrast, Chinese and Russian
sponge production is likely to remain level with last
years estimated output of 79,000 tonnes (174.2 million
pounds) and 44,200 tonnes (97.4 million pounds),
Meanwhile, industry observers in
this country said that Gehlers outlook for a decline in
sponge output could be conservative.
"I would be surprised if
its not more than 9 percent," said a U.S. industry source
about this years sponge production outlook, reflecting
the view of some other domestic observers. He noted in
particular that at the end of last yeara time when many
sponge buyers begin to order for the coming yearthe
business outlook was especially subdued.
A continuing erosion in scrap
prices, along with lagging demand from global nonaerospace,
industrial markets, were cited by U.S. sources as the main
reason for the decline in sponge demand.