Titanium spot prices continue to weaken despite growing
commercial airliner build rates and bullish forecasts for the
aircraft builders such as Chicago-based Boeing Co. and
Toulouse, France-based Airbus SAS are enjoying record
production and backlogs, market participants at the
International Titanium Association (ITA) annual conference in
Las Vegas said they expect prices to soften in the fourth
quarter despite what many of them say is steady or increasing
cranking up (production) on all of our models," Boeing
Commercial Airplanes director of market analysis Michael L.
little evidence in the titanium market that day-to-day prices
reflect ramped-up build rates.
"This is confusing," a
service center executive said. "Its the first time I
recall that our volume keeps growing yet the price keeps going
Spot prices for
standard aerospace 6-aluminum/4-vanadium ingot, which a month
or so ago was widely reported at about $9.25 per pound, is now
being offered at as low as $8.50 per pound, according to market
amm.com, Sept. 13).
"Ive never seen
so much material on the floor," said a buyer of bar products,
which seem to be particularly abundant.
A few sources
suggested it is just a temporary phenomenon, spurred by the
fourth-quarter efforts of a few producers to meet their sales
goals for the year.
Airbus vice president of metallic materials forgings and
castings procurement, told the ITA that the commercial aircraft
builders titanium requirement will have more than doubled
in 2010 through 2014 and by 2020 will have increased by 300
percent over the preceding decade. Airbus also projects the
need for more than 29,000 new passenger and freighter aircraft
over the next two decades.
Dreier said that
Airbus is holding about 20 percent of its titanium requirement
directly, while the remaining 80 percent is held by its supply
chain. "Theres a lot at stake" for Airbus with this
material, Dreier said in explaining the companys effort
to manage supply chain tonnage as part of its overall sourcing
strategy for metals.
Airbus this past week
landed a milestone order from Tokyo-based Japan Airlines Co.
Ltd. for 31 of its A350 twin-aisle airliners due to enter
service next year, landing a customer that previously had been
seen as standardizing on Boeing aircraft but which reportedly
was unhappy with delays and break-in problems with
Boeings 787 Dreamliner.
Warner said that
Boeing Commercial Airplanes, which has an eight-year backlog,
expects to deliver 635 to 645 planes this year, and the monthly
build rate on its top-selling 737 single-aisle airliner will be
raised to 42 from 38 early next year.
Warner also said that
plane builders arent "bringing too much capacity" into
the market, as some observers have cautioned. He said the
number of aircraft being delivered to carriers comprises a
"normal" 6 percent of the overall airliner fleet, but
"its a much bigger fleet" today than in years past.
"There are no signs we are over-delivering in the industry," he