In 2016, aerospace applications accounted for an estimated 45% of the 150kt titanium mill product market. Over the period to 2026, aerospace demand for titanium is expected to increase at 5%py. The cyclical nature of the global aerospace industry means, however, that the pattern of demand for titanium will continue to fluctuate significantly within the outlook period.
Civilian airframes and engines (for passenger and cargo planes) represent almost 75% of the aerospace titanium market. A sharp rise in civilian aerospace build rates since 2011 has reduced the share of military and space titanium use, but these still remain important and high-value sectors for titanium. Boeing's 787 comprises 15% of titanium in fly-weight, and Airbus's A320/350 12-14%, compared to 4-8% in the majority of older models. Growing passenger numbers in Asian and Middle Eastern countries and upgrades of the US fleet are near-term drivers for aerospace titanium demand, while Africa and India present longer-term opportunities.
Demand for titanium in industrial applications, which consumed a slightly larger volume than aerospace in 2016, is forecast to grow at 1.7%py, with consumer, medical and other applications at a similar rate. Industrial use of titanium has seen a steep drop-off in consumption as processing plant, desalination and nuclear build rates fell sharply from 2012. The market is returning to growth, but will be dependent on emerging economy industrialisation as nuclear power has fallen out of favour to renewables outside China, meaning it is unlikely to see the same sharp increase in demand seen from the mid-2000s to early 2010s.
Melted productcapacity hits a new peak in 2016
Production of titanium mill products is expected to keep pace with demand. Production of mill products is traditionally lower than that of melted product (ingot and slab) from which they are made, because of the losses during fabrication, but the ratio has fallen over time because of efficiency improvements. Twelve countries produce titanium melted products. The USA is the largest producer, closely followed by China. At 200kt in 2016, titanium melted product production is small in volume when compared to output of the light metals aluminium and magnesium.
Titanium melt capacity reached a new peak in 2016 at around 450ktpy, the large difference between capacity and melt product output reflecting the typical double or triple melting undertaken to meet aerospace/rotor-grade, but also significant overcapacity. Chinese melting utilisation rates are at only 40%, and may rationalise/consolidate. Outside China, investment in melting capacity has mainly been in electron beam melting capacity, favoured for scrap recycling. Melted product output fell post-2012 but showed the first signs of a recovery in 2016 and should improve alongside airliner build rates.
Peak sponge a looming possibility as scrap use rises
Ingot and slab plants are fed by titanium sponge and scrap. Over the past few decades, a wide number of factors have impacted the relative share of melt feedstock. Capacity for titanium sponge production peaked in 2013 at around 335ktpy, following significant investment in Chinese capacity alongside the boom in titanium demand for industrial applications. Output subsided from 2012 due to weakening demand and low prices, with production in 2014 down 32% on the 2012 peak. VSMPO of Russia remains the largest producer, with Toho and Osaka of Japan, and Timet of the USA also significant contributors to global supply, ahead of Luoyang Wanji in China - the largest Chinese supplier in 2016.
The global scrap ratio was reduced considerably in the mid-to-late 2000s as Chinese melt output increased, and China utilised relatively little scrap. This is because the Chinese market was industrial-product driven, and generated fewer turnings. Furthermore, few companies in China had the necessary facilities required for melting scrap in small pieces at that time, and the country also had abundant sponge supplies. The scrap ratio reached lows of 5-7% in 2011 and 2012, owing to the impact of China to a global state of sponge oversupply. However, with sponge production falling back, scrap prices remaining low, and Chinese companies gradually upgrading their facilities and increasing their scrap ratios, the global scrap ratio increased from 2013 onwards.
Increased scrap levels driven by integration (creating more new scrap) and more end-of-life product recycling (old scrap), together with low scrap prices are likely to result in more scrap utilised in melt production over the forecast period. This will depend on a suitable supply of quality scrap as not all scrap is suitable for remelting and not all remelted product is suitable for aerospace applications. In total, Roskill expects the scrap ratio to increase from 20% in 2016 to 30% in 2026. Thus, scrap consumption will total over 85kt by 2026. With scrap consumption increasing, the titanium industry may soon reach peak sponge use unless demand accelerates or alternative outlets are found. The competition between sponge and scrap is likely to keep raw material prices low, benefiting participants downstream.
Additive manufacturing using titanium continues to gain momentum
Additive manufacturing (3D printing) is a relatively new technology, albeit one that is expected to grow rapidly, and from a very small base in volume terms for titanium use. Additive manufacturing uses the principle of slicing a solid model in multiple layers, storing the data in a computer, and building up the part layer by layer following the sliced model data. There are five main processes, ranging from laser fusion to sold state cold consolidation. Titanium powder can be used in all five production methods, but it competes with titanium wire and different machinery manufacturers typically use one feedstock.
Global production capacity of titanium powder was around 4ktpy in 2016. The principal titanium powder producing companies are based in Canada, China, Japan, South Korea and the USA. The titanium powder market can be split into powder produced as a primary product, and lower grade fines. The market for high-value spherical or near-spherical titanium powder is estimated at 0.5-1.0kt, but only a small proportion is currently used in additive manufacturing. Some companies continue to explore low-cost titanium powder production and consolidation in competition with traditional melted products, but their focus is shifting to utilising this technology to make high volumes of lower cost powder for additive manufacturing instead.
Roskill has released its new titanium metal market report with forecasts out to 2026. It is essential reading for anyone requiring a comprehensive overview of this sector.
Titanium Metal: Global Industry, Markets & Outlook to 2026, 7th Edition, 2017 is now available from Roskill Information Services Ltd, 54 Russell Road, London SW19 1QL UK. Clickhere to download the brochure and sample pages.