Boeing 787 Delay Helps Ease Titanium Crunch( 20 May 2008 )

It’s reported by Aviationweek that it is not quite a "silver lining", but the delay in production of Boeing's new 787 jet has contributed to an easing of titanium prices.

Soaring global demand for the difficult-to-make strategic metal helped push up price by 163% between 2003 to 2006, according to U.S. government statistics. But titanium prices have eased 40% since peaking in late 2006, providing relief to Boeing and Airbus, which are incorporating record amounts of titanium into their next-generation aircraft.

A big reason for the recent titanium price cuts is that capacity expansions are starting to come online at titanium producers in Russia, the U.S. and China. UBS Investment Research analyst David E. Strauss estimates that worldwide capacity for titanium sponge grew by 35% in 2007 and will rise another 50% by 2010. "We believe this supply will be more than enough to accommodate higher production rates through the end of the [commercial aircraft] cycle," he wrote in a May 19 research note to his clients.

With aerospace and defense accounting for more than half of global demand for titanium, the 15-month delay in certification of the composite-rich 787 also has had an impact on demand. "We estimate that demand grew much less than expected in 2007 given the delay," says Strauss. New delays in deliveries of Airbus' A380, which uses 150,000 pounds of titanium per aircraft, are yet another factor.

Titanium, which is extracted from sand, is one of the most abundant elements in the Earth's crust. But the job of turning it into finished aircraft parts requires complex and highly proprietary production and machining processes that only a few metals companies have mastered. Because titanium is more compatible with composites than standard aluminum, aircraft builders' use of the metal has soared with their increased use of composites. Each 787 will contain 250,000 pounds of titanium; more than double the amount in Boeing's last new aircraft, the larger and heavier 777.