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Boeing sees titanium in balance by 2015

Keywords: Tags  Boeing, titanium, John Byrne, 787 Dreamliner, long-term supply agreements, aircraft, buy-to-fly rate, Frank Haflich

LOS ANGELES — Boeing Co. expects to be "in balance" on titanium by 2015, but it is unclear if this would trigger a surge in demand as it also targets significant reductions in its buy-to-fly rate.

John Byrne, vice president of aircraft, structures and materials for Boeing’s commercial airplanes unit, told the International Titanium Association (ITA) this past week that the company expects to have "ordering and consumption balanced out" by 2015.

For the past few years, Boeing’s inventory—which the Chicago-based company has declined to quantify—has been seen as one of the key barometers of the titanium supply, due principally to the amount of stock accumulated by the three-year delay on its 787 Dreamliner and a resulting market overhang. This spurred Boeing to renegotiate its required minimum annual purchases under its system of long-term supply agreements with the mills, but also extended the duration of these agreements, according to market sources.

Byrne noted this past week that Boeing usually likes "to go out 10 years" on its long-term supply agreements, either with agreements already in place or on the path to negotiation.

"We like where we sit today," he told the ITA.

Meanwhile, Byrne said Boeing aims to cut its titanium buy-to-fly ratio by as much as 25 percent from where it was in 2012—the "mid- to low" 8:1 range—by 2015. "We intend to take that to the high 6s or the mid-6s," in the next 18 months, he said.

Part of this effort involves converting about 600 parts that are machined out of plate into parts and components that are closer to net shape, such as forgings and extrusions.

The company’s last public estimate of the buy weight on the airframe of its largest titanium-consuming aircraft, the 787 Dreamliner, was about 180,000 pounds three years ago compared with an earlier 220,000 pounds (, Oct. 7, 2010). Byrne declined to quantify the plane’s current titanium buy weight following his presentation, but acknowledged that it has continued to decline although the reduction hasn’t been "huge."

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