Supply and Demand Situation and Trend of Global Titanium Industry

  1 Supply and Demand Situation and Trend of Raw Materials

  1.1 Superior Titanium Ore

  Rutile, which has been deemed as a superior raw material for producing titanium dioxide and titanium sponge, is generally the paragenesis with ilmenite, zircon and other heavy minerals.

  Only three mining companies all across the world have the annual production capacity of over 10 X 10⁴ tonnes, among which Sierra Rutile Marketing Ltd., with the headquarters located in Sierra Leone of Western Africa, accounted for 20% of the global supply, while Australia takes up 50%. In 2014, the global rutile output was 74.5 x10⁴ tonnes.

  Globally, with the declining reserves and quality grade of the rutile, and the increasing of orebody complexity, the growth of the consumption of the titanium dioxide pigment exceeded the supply of rutile. Moreover, both the rapid growth of the demand from the aviation field on titanium and the titanium white production through the emerging chlorination process in China would greatly increase the demand on rutile.

  1.2 Titanium Sponge

  It is estimated that the production of global titanium sponge has exceeded 30 X10⁴ tonnes. With the production capacity of 15 X10⁴ tonnes and over 10 titanium sponge producers, China has been the largest country across the world in terms of the capacity of titanium sponge. Currently, China is implementing industrial integration with the expectation of reducing the annual production capacity to 10 x10⁴ tonnes, and thus a proportion of small-scale, low-efficiency, and poor-quality producers of titanium sponge would be eliminated.

  The titanium sponge output of China was about 6. 8 x10⁴ tonnes in 2014, while both in 2012 and 2013 the output was 8. 1 x10⁴ tonnes, which took up nearly 40% of the total supply of the globe and exceeded the sum total of Russia, Kazakhstan and Ukraine. In the recent years, the export of titanium sponge of China fluctuated violently, with the export of 1,000 tonnees in 2009, 1. 1 x10⁴ tonnes in 2011, and 6,000 tonnes in 2014. In 2014, the biggest market was South Korea with 36% of gross export of China's titanium, followed by the US with 28%.

  The output of the titanium sponge of VSMPO of Russia, the magnate of global titanium industry, was 4 x10⁴ tonnes in 2014, while the output of the company exceeded 4 x10⁴ tonnes both in 2012 and 2013, accounted for about 20% of the overall supply of the world.

  As for Japan, the output of titanium sponge was about 3 x10⁴ tonnes in 2014 and was 3.5 x10⁴ tonnes in 2013. In the recent years, the export of titanium sponge of Japan has declined, with 3.1x10⁴ tonnes in 2012 and 1.6x10⁴ tonnes in 2014.

  1.3 Waste Material of Titanium

  One of the important channels for the supply of raw material of titanium is the waste material of titanium. Each year, half of the waste material was used to provide large amount of low-cost raw materials for producing titanium and titanium alloy, and the other half was used for the ferrotitanium conversion or applied in the other fields.

  Matt Schmink, vice-president of sales of Global Titanium Inc. (with the headquarters located in Detroit), analyzed the trend of the demand on ferrotitanium. In 2014, the gross output of steel exceeded 1.6 billion tonnes all across the world, among which the consumption of titanium was about 73,684 tonnes--mainly applied as alloy addition in the form of ferrotitanium or waste titanium to produce carbon steel and stainless steel. 80% of the steel with the addition of titanium was used in manufacturing automobile and electric appliance.

  According to Matt Schmink, the titanium consumption in steel industry would remain in about 70,000 tonnes by the year of 2020. The ferrotitanium market would enjoy a good supply and demand situation in the next few years and it's highly possible to face a buyer's market, which would therefore bring price downturn in waste titanium and ferrotitanium. The titanium industry may have to increase the utilization ratio of waste titanium and at the same time develop new market, so as to offset the situation of oversupply.

  1.4 Master Alloy

  Master alloy is also an important raw material of titanium alloy. The addition of the master alloy in processing could improve the heat resistance and corrosion resistance of titanium, so as to satisfy some particular purpose or requirement. As for master alloy, the vanadium and molybdenum took up 90% of the annual gross demand. Due to the special purpose of the usage of master alloy, the quality is of crucial importance, and the cost relies on the market price of the raw materials.

  Terry T. Perles, president of MoTiV Metals LLC (subsidiary corporation of Bridgeville), has estimated that the global vanadium consumption of 2015 would be 9. 3 x10⁴ tonnes, among which the steel industry accounted for 92%, titanium industry 5%, and chemical and energy reserve industries 3%; moreover, the global molybdenum consumption was 238,350 tonnes in 2015.

  2. Demand on the Aviation Market and Its Development

  2.1 Estimation from Authorities of Titanium Industry

  Wade Leach, vice-president of market and product management of ATI, continues to favor the titanium market towards the future commercial aircraft. His expectation was based on the analysis on the trends of the profitability of airlines, cost of fuels, and the ever-increasing circular flow of passengers; what's more, the output of the newly designed airplanes with the usage of large-amount titanium is increasing in a short run.

  Although the situations in Greece, Syria, and China are still in uncertain, the profitability of the airlines around the globe enjoyed a tremendously increase in 2015. Globally, the quantity of commercial aircraft would amount to 5 x 10⁴ by the year of 2035, according to Wade Leach, this number is as twice as that of 2014 (2.5 x10⁴). The supply chain of the production of airplane is globalizing, the new titanium alloy with more superior properties is in research, and the titanium alloy 3D printing-reinforced materials manufacturing technology is making rapid progress, all of those development would make the titanium alloy remain to be a superior choice for the materials of commercial airplane.

  According to Henry S. Seiner, vice-president of the business strategy of Timet, the gross output of aero-engine was 3,160 in 2014, among which the CFM International (Joint Venture of Snecma and GM) was the dominant producer, followed by GM, IAE (International Aero Engines), Rolls-Royce, and HP.

  Titanium alloy would remain to be the major material for the compressor of the jet engine, for example, the blades of the fans, and the titanium-aluminum alloy, as the substitute of Ni-based superalloy, is marching to the field of combustor of turbofan jet. However, the role of titanium alloy, which refers to the candidate material of airplane manufacturing, is challenged by composite materials and aluminum alloy.

  Eric Roegner, president of titanium and engineering products and defense department of Alcoa, believed that although defense budget the US and its general expenditure is stable, the cost in defense aviation is remarkably increasing. For example, the F42 and F-35 warplanes involved big titanium projects. Moreover, the application of titanium in the fuselage of warplane has rapidly increased; the proportions of titanium in F-22, F-35, and V22 are 32%, 25%, and 16%, respectively. The unrest situation would propel the growth in the demand on titanium in the defense aviation fields, especially in the Middle East.

  The innovation in materials and its manufacturing methods are also very important in promoting the application, for example, the research on the components and parts of titanium-aluminum airplane, the development on the 3D printing, and the innovative adhesive, welding, and technologies would all together to promote the applying of the titanium in airplane. In security and military field, the titanium is challenged by aluminum-lithium alloy, as the aluminum-lithium alloy, which also has the property of corrosion resistance, has been defined as the substitute of titanium in composite-intensive airplane.

  Michael Metz, president of VSMPOTirusU.S., conducted a review and outlook on the titanium market of 2010-2021 in Russia and given a list of data, including the general titanium consumption, the consumption of the fields of aviation, shipbuilding, power-generating, and general industries in the period ranged from 2010 to 2014, moreover, he also estimated the demand on titanium from 2015 to 2021.

  According to Metz, general demand of Russia on titanium would amount to 1. 31 x10⁴ tonnes by 2021, which is almost equal to that of 2014, but slightly higher than that of 2015 (1.25 x10⁴ tonnes). From the perspective of industries, the demand from aviation industry was nearly 7,000 tonnes in 2015, while in 2021, that number would increase to 8,000 tonnes; the demand from the shipbuilding industry was 3,600 tonnes, and it will reduce to 2,900 tonnes in the period from 2016 to 2017, finally by 2021 the demand would keep in the level of 2,400 tonnes; in terms of the industries of non-ferrous metal, equipment, and chemical engineering, the demand in 2015 was 840 tonnes and it will increase to 1,000 tonnes by 2021; in power generation, the demand seems to fluctuate frequently--450 tonnes of 2015, ,700 tonnes of 2016, 950 tonnes of 2017, 700 tonnes of 2018-2020, 420 tonnes of 2021; as for the other industries, the demand from 2015 to 2021 would keep in the level of 760 tonnes.

  President of Toho Titanium and the Titanium Association of Japan offered the sales volume of titanium manufactured lumber of the period ranged from 1981 to 2014. The gross sales of titanium products of Japan began to increase from 2013, and it is expected to increase to 1.5 x 10⁴ tonnes by 2015, slightly higher than that of 2014; moreover, the overseas sales have all the way much better than the domestic market since 2009 in Japan.

  2.2 Analysis from Authorities of Aviation Industry

  According to Airbus, there would be 29,000 newly constructed passenger planes and cargo planes to come into use by 2032, with gross values of nearly USD4.4 trillion. Thomas T. Cochelin, purchasing manager of titanium and special alloys of Airbus, mentioned that the company consumed 30 tonnes of titanium per day in 2014, as the titanium application of the new model of A350XWB is 180 times of A330, it is expected that the titanium consumption of the Airbus in 2020 would be 180% of that of 2013.

  According to William T. Shaffer, the materials and standards inspector general of Boeing, there would be 38,050 new airplanes deliver for commissioning by 2034, among which the biggest market would be Asia (14,300), followed by North America (7,890) and Europe (7,320).

  From Shaffer's introduction, as the commercial airplane 747-8 of Boeing has 6 million components and parts in total, 777 has 3 million, and 737 has 400 thousand, the components and parts the company has purchased each year amounted to 1 billion, with the cost of USD43 billion and suppliers of 5,400.

  According to Waldir Gomes Concalves, senior vice-president of global customer support and service of Embraer Commercial Aviation, there would be 6,350 commercial airplanes of 70—130 seats deliver into commissioning all across the world in the next 20 year, with the gross values of USD300 billion, among which the US would take up the biggest share (2,068, 32%), followed by Europe (1,160, 18%) and China (1,020, 16%); while in the next 10 years, there would be 9,250 official airplanes come into commissioning, valued USD265 billion, among which North America would account for the biggest market share (50%); the EMB-314 of Embraer would amounted to 300 by 2020, among which 190 have already delivered, and the KC-390 of the company would amounted to 700 by 2025.

  *This article is edited and translated by CCM. The original one comes from Titanium Industry Progress.

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