Conflict in Ukraine threatens titanium supply chain
2022-03-07
The escalating conflict between Russia and Ukraine on February 24 raised concerns about the titanium supply chain, with major producers of raw materials, metals and alloys located on the two countries' border and serving customers around the world.
Sanctions and a raw material embargo could threaten much of the sponge titanium market. Russia's VSMpo-Avisma, which supplies much of the titanium used in the skins of Airbus and Boeing aircraft, is the world's largest producer of titanium sponge, with an annual capacity of 34,000 tonnes.
"I don't think we are there yet, but if [the crisis] intensifies and responds to sanctions I think Russia could retaliate against metals exports," said one trader close to Avisma. "The interesting thing is that Both Airbus and Boeing depend on Avisma. We know they have approached their competitors because of the political situation."
Other sponge producers, such as Toho Titanium of Japan, ATI Metals and RTI International Metals of the United States, can serve as alternative sources of Titanium products. The recent acquisitions of Aubert & Duval by Safran and Airbus, the European aerospace manufacturers, suggest they are rethinking their metals supply chains. But given avisma's market share and the size of its product base, it will be hard to separate entirely from Avisma. In November 2021, Boeing signed an agreement with Avisma to "expand their strategic partnership in the supply and development of new alloys and technologies." Under the agreement, Avisma "will continue to be the largest supplier of titanium to Boeing commercial aircraft today and in the future," the Russian company said at the time.
Avisma has since signed new titanium supply agreements with Aernnova Aerospace of Spain and Barnes Aerospace of the UK for 2028 and 2026 respectively.
Supply constraints on ilmenite have increased competition for scrap
As international aerospace companies assess their access to Russian titanium, questions are also being raised about Russia's access to the raw material - ilmenite in particular. Russia had been importing ilmenite from Ukraine until President Volodymyr Zelensky recently banned exports to Russia.
This has given new impetus to the search for alternative feedstocks from African mines and generated new activity in the already tight titanium scrap market.
As a result, the price of Russian-grade ilmenite rose to $6.75-7.20 per kg in Rotterdam yesterday from $6.50-6.90 per kg on February 17.
"There are some serious problems in getting enough ilmenite at Avisma," said one trader. "There is a shortage, so they are looking for scrap. They've been in touch with us. "Supplies of vacuum-grade waste have been tight for months, and this has made matters worse."
