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Prepping for takeoff

Aug 31, 2017 | 08:00 PM | Myra Pinkham

Riding on the wings of strengthening aerospace demand – and cross currents in additive manufacturing – titanium demand is on track to rise above the turbulence of the past few years.

The titanium market appears to be on more solid footing this year due to a more favorable inventory position and continued strength in aerospace build rates.

“Titanium is coming out of a tough period, but since the middle of 2016 demand has been slowly but steadily rising,” Otis Claeys, chief executive officer of Luxembourg-based titanium products manufacturer LCMA SA, said.

The market had been hit in recent years by a combination of an oversupply of titanium sponge and lackluster demand even from the aerospace sector. Until recently, aerospace had been in a destocking mode.

Daniel Stohr, a spokesman for the Arlington, Va.-based Aerospace Industries Association of America (AIA), observed that in 2016 Boeing Co.’s commercial aircraft backlog shrank by less than 1 percent. Additionally, deliveries fell by 2 percent and new orders declined 13 percent. Similarly, Airbus SE’s backlog grew by a marginal 0.6 percent, with new orders falling 32 percent and deliveries increasing by 8 percent.

As a result, prices plummeted. Sponge prices ultimately bottomed out at about $5 per pound earlier this year, which, Claeys said, represented quite a drop from their peak of about $20 per pound in 2005.

Robert Baylis, managing director of London-based Roskill Information Services Ltd., observed that the titanium producers that are less integrated were especially hard hit, as they were caught holding high stock levels of titanium sponge. Integrated producers were better able to avoid having too much product on hand, he said. 

Now that supply and demand are more in balance, industry stocks are being absorbed. That rebalancing saw titanium prices bottom out in late 2016, and start to see the shoots of a recovery this year. He said much of the modest rebound has been fueled by optimism about the aerospace sector.

The aerospace industry, which reportedly accounts for about 45 percent of global titanium consumption, is already sitting on the largest order book in aviation history, according to Jeremy Halford, president of titanium and engineered products at New York-based Arconic Inc. He said a nine-year backlog for both commercial aircraft and aerospace engines exists. Halford further noted that Airbus’ 2016 Global Market Forecast projects that air traffic demand will double in the next 15 years.

LCMA’s Claeys attributed the increase in air traffic to an “explosion” in the global traveling population. The number of frequent flyers is expected to jump to about 5.6 billion within the next 10 years from about 2.9 billion currently. This rise will be driven by increased demand from such emerging economies as India and China, he said. “And there is a need for a lot of new planes to move all of those people,” Claeys noted.

At the same time, the titanium content per plane has increased in step with the long-term trend of increased use of carbon-fiber composites. This is due to the two materials’ compatibility vs. other materials, such as aluminum, Arconic’s Halford explained. “Additionally, the new engines for aircraft such as the Boeing 737 MAX and the Airbus A320neo are bigger, heavier and hotter, so we're seeing more lightweight titanium on those engines in addition to the airframes.”

Titanium tends to be used more on twin-aisle, wide-body planes, which have recently experienced a slump in orders. Richard Aboulafia, vice president of the defense and aerospace consultancy Teal Group, pointed out that while the Boeing 787 Dreamliner continues to ramp up, geopolitical issues in the Middle East have been negatively impacting wide-body aircraft sales.

Concerns have also been raised regarding how long the aerospace boom for single-aisle planes will last. Another worry is how deep the ultimate downturn will be—if it will be gradual or drop drastically, especially since the market has already been holding in a super-cycle for a while.

While seeing slowing production on its 777 and 747 platforms in 2017, Chicago-based Boeing has been increasing production rates for not only its 787 but also its 737 and 767 aircraft, AIA’s Stohr observed. He added that Airbus has increased production of its A320, A330 and A350 aircraft, while slowing production on its A380 planes.

“Overall, both manufacturers are increasing production rates to burn through their substantial backlogs, while remaining cautious of the decline in new orders,” Stohr noted. “Longer term, both manufacturers see the market for commercial aircraft growing by mid-single digits through 2035.”

Meanwhile, despite repeated pledges by the Trump administration to increase military spending, the defense side of the aerospace equation has remained fairly flat. The Teal Group’s Aboulafia noted, however, that the titanium-intensive Lockheed Martin F-35 Joint Strike Fighter is ramping up, albeit slowly, with production set to triple in coming years.

This boost, as well the restoration of some projects that had been under sequestration, has been counteracted by the winding down of other military programs. Greg Himstead, vice president of sales and marketing for Titanium Industries Inc., Rockaway, N.J., noted, however, that even flat to slightly positive titanium demand from the defense sector is a plus as opposed to a decline in demand.

Trends in titanium use for future commercial and military aircraft are not cut in stone. “The push for more composites per aircraft is largely seen to be a positive for titanium,” David Yoho, product manager for United Performance Metals (UPM), Hamilton, Ohio, maintains.

Despite expectations that the upcoming Boeing 797 Middle Market jet could employ even more composite content than the 787, Teal’s Aboulafia said it remains to be seen whether the 797 will use more or less titanium. Titanium has largely been used in the 787 as a connector between composites and aluminum, and it is unknown if such an application will be required and to what degree in the 797. The 797 was recently unveiled at the Paris Air Show and is expected to be introduced in 2025.

Given the recent acceleration in commercial aircraft builds, holes have started to develop in inventories of some titanium alloys, especially 6-aluminum/4-vanadium (6/4) sheet and plate. These alloys are seeing extended domestic mill lead times—about 40 to 50 weeks, according to Stephen Patera, vice president of sales at Titanium Processing Center, New Baltimore, Mich.

As a result, according to AMM’s early August assessment, 6/4 plate prices moved up to $28-$30 per pound from $25-$26 per pound a year earlier. Titanium supply could potentially tighten further with the recently passed, more stringent sanctions on Russia.

In a recent research report, Chris Olin, a senior research analyst at Independence, Ohio-based Longbow Research, noted that Russia’s VMSPO-Avisma Corp. supplies Boeing with 35 percent of its titanium through long-term contracts.

Titanium Processing Center’s Patera said it is also possible that should the steel and aluminum cases filed with the U.S. Commerce Department prove successful, a titanium Section 232 investigation by Commerce could follow. “Titanium is a strategic material,” he noted.
In other end-use sectors, titanium consumption for medical applications such as implants and instrumentation continues to rise 5 to 8 percent annually, and should do so in the foreseeable future, Yoho said. He cited the aging population as a sustaining factor.

Industrial demand for titanium, including from the chemical processing, nuclear and desalination markets, is more subdued, according to Roskill’s Baylis. He maintained that desalination activity has slowed both in the Middle East and the United States; that the chemical processing industry is mature and therefore has been exhibiting flattish demand; and that with activity in China slowing, there hasn’t been much growth in the nuclear energy industry.

Titanium use in both the oil and gas and mining sectors is seeing a little pickup, but nothing dramatic, according to Patera. On the mining side, although quoting activity has picked up, the actual placement of orders has logged little improvement.

Likewise, demand for titanium pipe for offshore drilling and pipelines where high corrosion resistance is a prerequisite, is just now starting to strengthen. If crude oil prices were to remain above $60 per barrel for a sustained period of time, it could “really move the needle,” Titanium Industries’ Himstead said. But with West Texas Intermediate prices on the New York Mercantile Exchange stuck at or under $50 per barrel, demand is muted.

AMM’s early August assessment for commercially pure (CP) titanium, which is used in the oil and gas sector, as well as other industrial applications, was pegged at $9.5 to $10 per pound for plate and $13 to $13.50 per pound for sheet, down from $10.64 to $11.14 per pound for plate and $13.50 to $14 per pound for sheet a year earlier. 

John Wilcznski, technology director for America Makes-National Additive Manufacturing Innovation Institute, said that the idea of using titanium for additive manufacturing and/or 3-D printing has been “intriguing” given that titanium is a more expensive raw material.

America Makes is a public-private partnership launched in 2012 as the first manufacturing innovation institute started by the Obama administration.

Additive manufacturing, which generates less waste, could cut costs, reduce production steps and enable the production of complex parts that are difficult to make through traditional methods. In fact, 25 percent of America Makes’ applied research projects involve titanium.

LCMA’s Claeys estimates that it takes about 2 kilograms (kg) of sponge to produce a 1-kg part while that same part would consume about 1.1 kg of powder if it were 3-D printed using powder. Some additive manufacturing is done using wire.

“But there are still a lot of hurdles that have to be overcome before it is viewed as having wide acceptance,” Claeys cautioned.

One major hurdle, according to Titanium Industries’ Himstead, is that additive-manufactured parts don’t necessarily prove that successful in applications where they are subject to repeated loads or stresses, which could accentuate any potential defects. It is for this reason that medical applications, which don’t undergo the same stresses as those in aerospace, were among the first adopters of 3-D manufacturing technology. The verification and/or certification requirements of the aerospace industry are also very stringent. Himstead estimates that it will be another three-to-five years before additive manufacturing could be seen as commonplace in the medical sector. And that it could take as long as 10 years before it penetrates aerospace applications.

Even so, some small, new-generation aircraft engine and airframe parts have been additively manufactured. In fact, Halford said that Arconic has already sealed three agreements with Airbus for 3-D printed parts.

“As demand for additive manufactured products grows, our customers are increasingly looking to us not only for manufacturing expertise but for our materials expertise,” Halford noted. “That’s because most of the powders in the market today were not developed for 3-D printing and don’t take full advantage of additive manufacturing’s capabilities,” he explained.

It is for that reason, Halford said, that Arconic opened a state-of-the-art metal powder facility last year at its technology center outside of Pittsburgh. There, it is developing proprietary titanium and other metal powders with the specific properties needed to 3-D print high-performance components.

Several other titanium producers have also moved to position themselves as additive manufacturing raw material suppliers. In July, Pittsburgh-based Allegheny Technologies Inc. (ATI) entered into a “meltless titanium” joint venture with Cincinnati-based General Electric Aviation.

Rich Harshman, ATI’s chairman, president and chief executive officer, said during a recent earnings conference call that the new venture could eventually be seen as an inflection point for the broader use of titanium alloy powders in additive manufacturing. 

The approach uses a chemical process that allows titanium powder to be produced in fewer steps using lower-cost raw materials. ATI, the majority owner in the 51/49 joint venture, plans to open a pilot production scale facility on ATI-owned property by 2019. This will be followed by a larger facility if the technology proves successful.

Philadelphia-based Carpenter Technology Corp., which acquired Puris LLC, Bruceton Mills, W.Va., a producer of titanium additive manufacturing powder earlier this year, formed a strategic alliance in June with Samuel, Son & Co.’s Burloak Technologies Inc. unit. Efforts undertaken by the alliance will be aimed at integrating and enhancing Carpenter’s powder and wire-additive manufacturing offerings.
The company has also entered into a supply relationship with Desktop Metal Inc., Burlington, Mass., enabling more than 20 of its alloys to be used in that company’s 3-D-printing systems’ premium material cartridges.

In April, Boeing ordered its first additive-manufactured parts to outfit the 787 commercial airliner from Norway’s Norsk Titanium AS. The parts are being produced using that company’s Rapid Plasma Deposition process, which employs titanium wire in its 3D printing.

Opinions differ when it comes to gauging what impact the growth of additive manufacturing will ultimately have on the titanium supply chain.
America Makes’ Wilcznski maintained that while there will be a number of opportunities for additive manufacturing, not all components will be made that way. “The application needs to be a good fit,” he emphasized.

While LCMA’s Claeys believes there will be less need for semi-finished titanium distributors, he said the question is how much less?

On a related issue, Titanium Industries’ Himstead thinks distributors are largely standing by and watching what is happening, deciding if they want to begin selling powder or increase the amount of powder they sell. He added that they are “even considering adding 3-D printing to the processing and/or fabrication services they already offer.”

Overall, it appears as if 2017 will be a good year for titanium, with demand rising somewhere between 5 and 10 percent vs. last year, UPM’s Yoho predicts. Himstead agrees, adding that he is generally bullish about the short- to medium-term future as well, “although we know that this is a cyclical industry, and that the shoe can drop any time.”