Spot prices for commodity titanium continue to be under
pressure, reflecting a market thats showing little sign
of improvement moving into the fourth quarter.
Spot prices for
standard aerospace 6 aluminum/4 vanadium ingot have slipped
below $9.50 per pound to a range of $9.25 to $9.30, according
to some industry sources, while spot prices for 1-inch-diameter
bar are threatening to fall below $20 per pound in some cases
from an estimated range of $24 to $25 late last year.
Lead times for 6/4
ingot are estimated as short as four to six weeks, while
deliveries for 6/4 bar are estimated at six to eight weeks
compared with as long as 12 weeks earlier in the year.
Some buyers said the
recent softening may reflect in part an effort by mills looking
to reach annual volume targets as the years final quarter
One ingot buyer
pointed out that, with the price of scrap so low, its
more economical to have it converted back into ingot on a toll
basis rather than selling it to a dealer and buying ingot
"I dont want to
sell it separatelyits too cheap," a buyer said
about the scrap his company is generating.
Market sources also
point out that most titanium today isnt being sold on the
spot market but rather through multiyear supply agreements
between the mills and their prime contractor customers in the
aerospace industry. These prices often are determined by
various raw material and economic indices rather than immediate
One likely reflection
of the price on all material being shipped is the August U.S.
producer price index (PPI) for titanium mill shapes, which was
up 0.1 percent from the previous month but down 8.3 percent
from a year earlier, according to data released Sept. 13 by the
U.S. Bureau of Labor Statistics.
"That sounds about
right, judging by what weve seen in our own business," a
distribution executive said in reaction to the year-over-year
decline in the PPI.
Boeing Co. has said previously that it would like to end
titanium scrap auctions as it focuses on reverting scrap
generated from the production of its airliners directly back to
the titanium mills that supplied the metal, it has continued to
occasionally auction off material, giving a clue to overall
In late August, in a
combined auction of bulk weldable and mixed titanium scrap
generated by Boeings Puget Sound operations, the high bid
for the bulk weldable portion was only $2.06 per pound.
Industry sources also
note that Boeings auction prices are often a bit higher
than the day-to-day market, where dealers buying prices
for unprepared bulk weldables are estimated at under $2 per
pound, reflecting a steady erosion in prices since they reached
about $5.50 per pound in mid-2011, according to sources.