Structural shifts in the aerospace industry as it recovers from the upheaval of the past 18 months are set to reshape titanium demand, with initial ramp-ups threatening to distort the market in the near-term, while in the longer term new aircraft designs will require a re-evaluation of their titanium intensity.
While demand for most raw materials from the commercial aerospace market fell in 2020, demand from defence aerospace applications grew in response to geopolitical and technological factors. In commercial aerospace, the market now faces a structural shift away from large, more titanium-intensive aircrafts.
Commercial market shifts toward smaller aircrafts
"2020 will go down as the worst year in the history of the jet age," managing director of Aerospace Advisory (AA) Kevin Michaels told delegates at the virtual International Titanium Association (ITA) conference yesterday.
Global commercial aircraft production fell to 829 in 2020, down sharply from 1,880 in 2019, according to AA. Recovery in the sector is expected to be slow, with 1,012 aircraft forecast to be produced this year, 1,272 in 2022, 1,421 in 2023, 1,616 in 2024 and 1,779 in 2025.
Of these, a larger percentage are expected to be single-aisle aircraft, which are less titanium-intensive than their twin-aisle cousins. The shift from twin-aisle to single-aisle aircraft will reduce titanium demand per plane by around 23pc from an industry average of around 30t per plane in 2019, according to estimates by US-based Timet.
Timet also predicts that titanium demand from commercial aerospace over the five-year period between 2021-25 could be as much as 220,000t, but deliveries will be less than 200,000t because of bottlenecks and inventory overhang at parts and aircraft suppliers.
"A lot of the inventory in the system for twin-aisles may not match the inventory for single-aisle aircraft," said Stephen Fox, Timet's vice president of technology.
Ramp-up could cause market distortions
Michaels warned that upstream suppliers of titanium and other metals parts could suffer during the coming ramp-up of aerospace manufacturing.
He anticipates bottlenecks related to a skilled staff shortage, capital which is already depleted and the bullwhip effects of demand distortions and high raw materials costs.
"We don't anticipate attrition at the mill product level, but what we worry about is on the ramp-up we could see more attrition of these sub-tier suppliers," Michaels told delegates. "When it comes time to ramp-up and you have to engage in long lead ordering, that's when it becomes difficult. There is a working capital barrier when you have to go back to your lender to engage in long lead orders when maybe you don't have the purchase orders from customers."
Timet also warned delegates about supply chain shocks and disruptions in the coming years, noting that the complexity of aerospace supply chains was bound to cause issues in the coming years.
"Most of the major participants in the commercial aviation supply chain are doing everything they need to be healthy, but it only takes one weak link," vice president of commercial strategy at US-based Howmet Aerospace, Sam Stiller, said. "We're all facing labour shortages and challenges. There's been a lot of retirement of people out of the industry over the last 18 months."
Defence market remains robust
"Amid the turbulence we've seen in the commercial market, we have witnessed a relatively stable and even growing demand picture in defence," Stiller said.
Global military expenditure is at an all-time high, while geopolitical forces such as great power competition and a new focus by European countries on national sovereignty, will continue to increase defence spending.
Total global military expenditure rose to just below $2 trillion in 2020, according to the Stockholm International Peace Research Institute, a rise of 2.6pc in a year in which global GDP fell by 4.4pc.
"In some cases, [the pandemic] showed how defence spending was leveraged and used by some countries as a stimulating economic tool. Defence aerospace markets have shown a certain level of built in immunity to commercial disruption," said Stiller.
Titanium content in new military aircraft is increasing. The US F-35 is made of around 20pc titanium by weight, while the V-22 is made of 31pc and the F-22 is made of 39pc, compared with 12pc in the older F-18, 10pc in the F-15, and 7pc in the F-16 fighter jets, according to Howmet. Titanium helps aircraft in a number of ways, improving performance at high temperatures, lower thermal expansion and higher corrosion resistance.
"Simply put, engines are getting a lot hotter and therefore structures are getting a lot hotter, and that needs to be managed. The movement from aluminium aircraft to composites is also a driver for our industries growth in titanium," Stiller said. "New aircraft performance needs increase the use of titanium and other related advanced materials. They're increasingly reliant on composite materials, which consequently drives incremental titanium usage."
