Although most factors
in the titanium market have producers thinking locally, the
supply and demand curve is still forcing many to act globally
as the twin realities of overcapacity and oversupply exert
Global titanium sponge
capacity jumped to 241,000 tonnes in 2012, up 94.4 percent from
124,000 tonnes in 2009, resulting in what London-based
consultancy Roskill Information Services Ltd. estimates is a
The global market is
expected to work off surplus capacity this year, Roskill said,
forecasting that demand for titanium mill products will grow at
an annual rate of 6 percent to 140,000 tonnes by 2015,
requiring up to 200,000 tonnes of sponge.
and forecast supply of aerospace sponge--produced chiefly in
Japan, Kazakhstan, Russia and the United States--is more
than adequate to meet demand since theres
some unused capacity overhanging the market,
In just one example of
a response to overcapacity, Pittsburgh-based Allegheny
Technologies Inc. (ATI) is running its Rowley, Utah, titanium
sponge operation at just 60 percent of capacity due to
reduced global demand for industrial-grade titanium,
chairman, president and chief executive officer Richard J.
During a quarterly
earnings conference call at the end of July, he noted that
industry overcapacity due to a lagging global market for
nonaerospace industrial titanium has created short-term
pressure on spot transaction business that
magnifies disruptions due to ongoing inventory
After falling in 2009,
global supply of titanium sponge rose by an average of 26.5
percent per year from 2010 to 2012, creating a worldwide
surplus, Roskill said in its Market Outlook to 2018
report. Output is expected to fall in 2013 because of growing
inventories and slowing demand growth. World titanium sponge
production capacity is in excess of both demand and output.
Most of this surplus
is for industrial-grade material in China, although capacity
for aerospace-grade sponge, mainly in Japan, Kazakhstan, Russia
and the United States, is more than adequate to meet demand.
Nevertheless, new capacity is likely to come on-stream in
China, Ukraine and the United States, and the supply of sponge
is forecast to grow 5 percent per year to 2018.
sponge prices will remain relatively subdued over
the next two years despite growing demand from China, Roskill
analysts said in the market outlook.
consultancy noted that U.S. imports account for more than half
of global trade in sponge. U.S. titanium producers also
rely heavily on supplies from Japan and Kazakhstan,
although the latter countrys role is declining as it
increasingly processes its own sponge.
Titanium sold for
industrial applications is more price sensitive
than aerospace, since industrial specifications arent as
rigorous as in aerospace and theres more competition in
the industrial market from other metals, Roskill noted. This
price sensitivity is more apparent in North America
and Europe than in China, where titanium is often chosen over
less-costly materials and now accounts for half of industrial
After stalling in
2012, global demand for titanium mill products will resume
growth this year and expand by 4 to 5 percent annually through
2018, although the titanium sponge surplus will continue,
according to Roskill.
Roskill noted that
while demand for mill products--based on apparent
consumption--reached a record 165,000 tonnes (363.8 million
pounds) in 2011 after recovering rapidly from a sharp downturn
in 2008, growth stuttered in 2012, barely budging
from the previous years level.
AMM that world production of mill products moved to
about 152,500 tonnes (336.2 million pounds) in 2012, up 3
percent from 148,000 tonnes (326.3 million pounds) the previous
year, with China accounting for about 38 percent of
international mill product output.
Although titanium is
used in a variety of applications, Roskill said that aerospace
remains the single-largest market at 60,000 tonnes (132.3
million pounds) in aircraft buy-weight of mill products in
2012. Growth in aerospace has been aided by the increasing use
of carbon-fiber composites, which are compatible with
titanium but not with aluminum, in the latest generation
of airliners, such as Chicago-based Boeing Co.s 787
Dreamliner and France-based Airbus SAS A380 and A350,
which helps assure titaniums future role, Roskill
VSMPO-Avisma Corp., the worlds largest aerospace mill
product source, supplied more than 20,000 tonnes (44.1 million
pounds) last year, it added.
In an example of a
different response to circumstances, while titanium capacity
utilization at Pittsburgh-based RTI International Metals Inc.
has dropped sharply from earlier this year, its not all
bad news for the producer.
Before RTIs new
electron-beam (EB) furnace came on-stream, we were almost
at full capacity, vice chairwoman, president and chief
executive officer Dawne S. Hickton noted during an August
earnings conference call. Now that were on, clearly
we have more capacity, she said, referring to the new
furnace at the companys RTI Alloys unit in Canton,
RTIs overall capacity utilization at 60 to 70 percent,
including the new furnace, pointing out that RTI had produced 1
million pounds of material in the EB furnace as of the end of
June out of an annual capacity of 8 million pounds.
of the furnaces output is due to begin in the current
quarter, and correspondingly we expect to see improving
operational performance comparable to the first half of
2013, Hickton said.
The company has mill
product capacity of 22 million to 23 million pounds per year at
its Niles, Ohio, facility, where it houses its vacuum-arc
remelt operation; and 14 million pounds per year at its
$135-million plant in Martinsville, Va., where the company
began commercial production at its new forging cell last year.
RTIs annual capacity is now estimated at about 25.5