A reader at SeekingAlpha sent this article regarding Titanium supplies - it sounds a lot like the steel market about 3 years ago (or oil, or iron ore, or wheat, or potash, or corn, or insert your commodity here....) where supplies cannot keep up with world demand. You'd expect some nice pricing power for these players in the next 3-5 years (at least).
- Buyers are correct in worrying about supply of titanium and titanium alloys through 2010. That’s the admission from Dawne Hickton, Vice President and CEO of titanium producer RTI International Metals in Niles, Ohio, even though producers are dusting off expansion blueprints for titanium sponge and mill product capacity.
- Major jetliner makers already have a six-year backlog for new aircraft designs that call for three to four times as much titanium as older models.
- Various buyer surveys by Purchasing have found concern about future availability of titanium—from sponge, the raw material, to final fabricated parts, which already take as long as 18 months for delivery these days.
- Reason: One key factor is the time it takes to get new capacity on line. Hickton says 30-36 months are needed before a new sponge plant goes in operation and even longer for downstream capacity of mill products and finished fabricated parts, since production has to be certified to meet aerospace and medical industry quality requirements.
- John Mothersole, an economist with Global Insight in Eddystone, Pa., tells the conference that global sponge capacity will increase by 14% annually between 2006 and 2010 to 220,000 metric tons, yet world demand will surge by as much as 40% in the same time frame, and will keep pressure on supply and prices.
- And there’s also a chance that aerospace demand for high-grade titanium and titanium alloy mill products could grow by as much as 22% annually next decade— if and when the Boeing 787 and Airbus A350 and A380 programs really take off.