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Titanium spot market under pressure, prices drop

Keywords: Tags  titanium, titanium prices, titanium scrap, boeing co., Frank Haflich


LOS ANGELES — Spot prices for commodity titanium continue to be under pressure, reflecting a market that’s 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 year’s final quarter begins.

One ingot buyer pointed out that, with the price of scrap so low, it’s more economical to have it converted back into ingot on a toll basis rather than selling it to a dealer and buying ingot separately.

"I don’t want to sell it separately—it’s too cheap," a buyer said about the scrap his company is generating.

Market sources also point out that most titanium today isn’t 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 market factors.

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 we’ve seen in our own business," a distribution executive said in reaction to the year-over-year decline in the PPI.

Although Chicago-based 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 scrap prices.

In late August, in a combined auction of bulk weldable and mixed titanium scrap generated by Boeing’s Puget Sound operations, the high bid for the bulk weldable portion was only $2.06 per pound.

Industry sources also note that Boeing’s 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.


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