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RAND Corporation
Titanium: Industrial Base, Price Trends, and Technology Initiatives

Titanium: Industrial Base, Price Trends, and Technology Initiatives


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Between 2003 and 2006, the price of titanium more than doubled. The authors attempt to answer four primary questions: What triggered this price surge? What are titanium1s future market prospects and emerging technologies? What are the implications for the production cost of future military airframes? How might the Department of Defense mitigate the economic risks involved in the titanium market?

Product Details

ISBN-13: 9780833045751
Publisher: RAND Corporation
Publication date: 04/15/2009
Series: Rand Corporation Monograph
Pages: 154
Product dimensions: 6.20(w) x 8.90(h) x 0.50(d)

About the Author

Obaid Younossi (B.S. Mechanical Engineering University of Pittsburgh, Pittsburgh, PA) is an engineer, Research Staff Management Division.

Table of Contents

Preface iii

Figures ix

Tables xi

Summary xiii

Acknowledgments xxiii

Abbreviations xxv

Chapter One Introduction 1

Background 1

Study Objective 4

Approach 5

Outline of the Monograph 6

Chapter Two Titanium Processing 7

Titanium and Its Properties 7

Titanium Metal Products 8

Ores and Concentrates 8

Sponge 8

Ingot 9

Mill Products 9

Production Processes 9

Extracting Titanium Metal from Ore 10

Producing Ingot from Sponge 10

Primary Fabrication: Processing Ingot to Mill Products 13

Secondary Fabrication: Fabrication Parts from Mill Products 14

Scrap 14

Ferrotitanium 15

Production Cost Structure 16

Refining Cost 17

Fabrication Cost 17

Buy-to-Fly Ratio 18

Cost-Saving Technical Changes 18

Summary 19

Chapter Three The Titanium Industrial Base and Other Market Characteristics 21

Geographic Distribution 21

Major Producers 22

Major Buyers 24

Substitutes and Complements 28

Market Price 29

Oligopolistic Price 29

Market Size and Market Risks 29

Spot Market Versus Long-Term Contracts 30

Import Tariffs 31

Summary 32

Chapter Four Supply-Side Drivers of Titanium Price Fluctuations 35

Availability and Price Trends of Raw Material 35

Sponge and Scrap Shortage 36

Depletion of U.S. Titanium Sponge Stockpile 38

Responsiveness of Production Capacity to Demand 39

Excess Production Capacity of Titanium Sponge Until 2004 40

Titanium Sponge Production Capacity Expansion After 2004 41

Other Supply-Side Factors 42

Entry and Exit 42

U.S. Titanium Metal Production Capacity Trends 44

Berry Amendment 45

China's Impact on Titanium Prices 48

Summary 49

Chapter Five Demand-Side Drivers of Titanium PriceFluctuations 51

Three Primary Demand Drivers of the Commercial Aircraft Manufacturing Industry 52

Commercial Aircraft Orders Skyrocketed 52

Titanium Content per Aircraft Increased 53

Increased Demand from Military Aircraft Manufacturers 53

Increased Demand from the Industrial Sector 55

Increased Spot Market Transactions 57

Interaction of Demand- and Supply-Side Drivers to Bring Out the Recent Turmoil in the Titanium Market 59

Relationship Between Titanium Price Trends and Demand Shocks from the Aircraft Manufacturing Industry 59

Titanium Demand from the Commercial Aircraft Industry and Titanium Price Trends 60

Titanium Mill Product Price Elasticity Before 2004 64

Price Elasticity of Titanium Demand Since 2004 68

Summary 69

Chapter Six Market Prospects and Emerging Technologies 73

Market Prospects 73

Prospects of the World Titanium Sponge Supply 73

The Impact of China on the Titanium Supply 76

Future Demand for Titanium 77

Summary: Future Titanium Market Balance 81

Developments in Titanium Production Technology 82

Emerging Production Techniques 83

Improved Titanium Extraction and Refinement 84

Titanium Powder Metallurgy 87

Single-Melt Processing 88

Solid Freeform Fabrication 90

Improvements in Machining 91

Cost-Saving Potential of Emerging Technologies 92

Summary: Developments in Titanium Production Technology 93

Chapter Seven Conclusions and Policy Implications 95

What Triggered the Recent Titanium Price Surge? 95

China's Impact on Titanium Prices 97

Market Prospects and Emerging Technologies 97

The Titanium Market in the Near Future 97

Titanium Production Cost Drivers 98

Emerging Technologies 99

Policy Implications 101

Long-Term Contracts Are Needed to Mitigate Market Volatility 102

Monitoring Market Trends to Improve Forecasting Power 103

Reducing BTF Ratio and Optimizing Scrap Recycling 105

Searching for New Technological Opportunities 106


A Aircraft Included in the Titanium Demand Calculation and Data Sources 109

B Questionnaire to Industry Experts 111

C Supply- and Demand-Side Conditions Resulting in the Recent Titanium Market Turmoil 119

Bibliography 123

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