Scrap shortage from aviation pushes European titanium prices to multi-year highs

The European ferro-titanium price has jumped to a peak last seen in January 2013, with strong demand from consumers for prompt deliveries and into February combining with a shortage of scrap to push the markets higher.

Fastmarkets assessed the price for ferro-titanium 70% Ti, max 4.5% Al, ddp Europe at $7.00-7.50 per kg on Wednesday December 16, an increase of more than 11% from $6.25-6.75 per kg a week earlier and the highest in almost eight years when it was at $7.45-7.55 per kg ddp.

A few hundred tonnes of deals were reported for standard grade and refined grades, such as low aluminium content, on a spot basis, as well for delivery in the first two months of next year. Higher grade ferro-titanium was reported sold for as much as $8.90 per kg ddp for delivery in February.

Most suppliers said they expected the ferro-titanium market to reach double figures in the next few weeks or so, with one supplier saying there is a similarity between this rally and the one in 2005 when prices moved up $30 kg – the highest since Fastmarkets started charting the market at the start of 1999. The market surged to as high as $33.50 per kg in March 2005, from as low as $12.45 per kg in October 2004.

“We sure hope we do not have through the $30-plus price agony of ferro-titanium again,” one producer on the continent told Fastmarkets. “It was a once in a lifetime experience that has taken enough years of my life in terms of stress. But we agree that double digit alloy prices are very likely to happen in 2021.”

“Titanium trading is a very lively market; the buying request levels from customers and also from dealers are enormous,” another European producer said. “But we can no longer serve them all. We are producing a lot of material, but when it’s ready, it’s sold right away. You can’t build up stock levels at the moment.”

“We’re firmly over $7 per kg for standard-grade ferro-titanium now; the market is on a steady but steep incline currently,” a UK-based producer said. “Scrap is becoming an endangered species; availability is the key element, price is secondary. The market is just totally crazy at the moment on either side, both for alloy and scrap. There is no end in sight to the market rally.”

Ferro-titanium is made by melting titanium scrap (sponge, chips and solids) with iron in an induction furnace, with scrap generated mostly in machine shops, forge shops and fabricators. World capacity for 70% standard grade ferro-titanium is estimated to be about 65,000-70,000 tonnes per year, although that capacity is not fully utilized.

Titanium industry sources estimate the world titanium scrap market is evenly split at 80,000 tonnes for aerospace scrap and 80,000 tonnes for mixed ferro-titanium scrap, which is used in steelmaking.

Scrap shortage
A major part of the current jump in ferro-titanium and other titanium prices such as sponge, is the shortage of scrap, mostly as a result in the collapse of aerospace manufacturing this year after airlines took remedial action to mitigate the fall in passenger travel amid the impact of the Covid-19 pandemic.

Airframes comprise about 15% titanium and aircraft engine production uses specialty alloys that contain titanium and other high-temperature metals. Titanium scrap is produced across the aerospace supply chain, such as in super-alloy production and aircraft and defense manufacturing.

Fastmarkets assessed the price for titanium scrap turnings, unprocessed type 90/6/4, 0.5% Sn max, cif Europe at $1.25-1.30 per lb on December 16, from an annual low of $0.60-0.65 per lb through July into early September. The market is at its highest since March 2015, when it was in a range of $1.15-1.25 per lb.

The price assessment for higher tin content titanium scrap turnings, unprocessed type 90/6/4, 0.5-2% Sn max, cif Europe rose to $1.15-1.20 per lb on December 16, from an annual low of $0.50-0.55 per lb in the same July-September period. The market is at its highest since May 2015, when it was assessed in a range of $0.95-1.15 per lb.

European suppliers noted further scrap tightness was likely given that much of it arrives from Russia where heavy industry will be shut for year-end holidays until January 6, with a full return by Russian dealers to the market a few days later.

Trade sources have also noted the increase in the cost of titanium sponge, which is used as a substitute for ferro-titanium output by some producers. Those scrap consumers that can use sponge are looking to purchase anything available as scrap is in such short supply. That trend is expected to last well into next year because the civil aviation sector should extend its slump from 2020.

But with uncertainty over travel restrictions likely to be here for the long haul, making any forecasts based on the fundamentals of titanium supply and demand next year is proving difficult. This is undermining market confidence and encouraging market dealers to build as much stock as they can.