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Titanium surcharge continues slide

Keywords: Tags  titanium, surcharge, Allvac, Allegheny Technologies, aerospace titanium, titanium bar products, titanium flat products, titanium billet Frank Haflich

LOS ANGELES — A key titanium surcharge continued to fall in the first quarter as buyers look for signs that the price-cutting that characterized much of last year’s fourth quarter might be easing.

Allvac Inc., a unit of Pittsburgh-based Allegheny Technologies Inc., lowered its first-quarter surcharge on standard aerospace titanium 6-aluminum/4-vanadium bar and flat products to $4.14 per pound, down 5 percent from $4.36 per pound in the fourth quarter, and applied similar surcharges on titanium 6/4 Eli (extra-low interstitial) bars, flats and billet. The Monroe, N.C.-based company also cut its surcharge for titanium 6/4 billet to $3.77 per pound, down 5 percent from $3.97 per pound in the previous quarter.

While the first-quarter decline is about half the falloff from the third to fourth quarters of 2013, it nevertheless represents continual erosion in this benchmark charge, tumbling nearly 40 percent since the fourth quarter of 2012.

Allvac does not disclose the specific elements of its surcharge or their portions. However, the components are generally viewed to include sponge, master alloys and energy. Moreover, scrap, which has fallen steadily since mid-2011, is presumed to be one of the most significant components.

Buyers also view the continued decline in the surcharge as being reflected in what they describe as tepid spot market demand for mill products, with discounts accelerating on commodity items in the fourth quarter, as some producers battled to ship material before year-end.

"(The mills) told us, ‘We’ve got to make our target numbers for the quarter,’ " a buyer said. But some market sources think discounts could ease as mills increase shipments to airframe and engine builders and their subcontractors under existing long-term supply agreements.

First-quarter surcharge declines were also posted for other popular aerospace alloys. The surcharge for titanium 6aluminum\2tin\4zirconium\2molybdenum bar and flat products, widely used in aircraft engines, is down 2.6 percent from the fourth quarter to $5.32 per pound and down 2.4 percent on billet to $4.85 per pound. Titanium 3aluminum\2.5 vanadium bar and flat products, primarily used for tubing, was down 2.7 percent to $4.64 per pound and down 2.8 percent on billet to $4.23 per pound.

The falloff was greater in commercially pure Grade 2 titanium, sold principally to non-aerospace markets. The first-quarter surcharge for CP-2 bar and flat products was off 7.7 percent to $3.49 per pound and down 7.8 percent on billet to $3.17 per pound.

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