European titanium prices rise on renewed steel demand

European prices for titanium products linked to steelmaking have begun to increase as mills re-enter the market to find producers operating at reduced capacity.

Prices for by-product Tg-Tv-grade sponge, which is used mainly in steel production, rose to $5.40-5.80/kg du Rotterdam yesterday — their first such rise since dropping to a 3.5-year low of $5.30-5.70/kg on 29 June. Ferro-titanium prices also have picked up, with western-grade alloy up to $3.40-3.65/kg in Rotterdam, from $3.35-3.50/kg on 26 August, and Russian-grade alloy up to $3.30-3.50/kg du Rotterdam, from $3.15-3.40/kg on 26 August.

Consumers in the steel industry have returned to the market lately with enquiries for larger volumes than has been the case for much of this year. One steel mill — which bought 24t of ferro-titanium at $3.30/kg last month — entered the market this week bidding for 60t at the same price, but the bid was rejected. It went on to bid at $3.60/kg but this price also was turned down, with the seller expecting prices to rise further in the coming days.

Sellers are holding limited stocks of ferro-titanium after several months of reduced production and do not want to sell it all at once — hoping to recoup some of the losses suffered while prices fell during the early summer. A UK producer that reduced its staff's shifts to three days a week and capacity utilisation to 50-60pc during the summer warned that output cannot be ramped up easily because of tight scrap availability.

By contrast, consumers in the steel industry have started to ramp their capacity utilisation rates back up. Today, ArcelorMittal restarted its Sestao electric-arc furnace in Bilbao, which has a nameplate capacity of about 1.8mn t/yr of hot-rolled coil (HRC) and 600,000t of pickled material. It will produce about 100,000t/yr during its initial restart phase.

Argus assessed HRC prices at $471.25/t ex-works northwest Europe on 9 September, up from a year-to-date low of €384.50/t on 25 June.

Aerospace collapse tightens scrap, Tg-Tv supply

This year's collapse within the commercial aerospace industry has tightened supply of titanium scrap and Tg-Tv-grade sponge, restricting production ramp-ups further down the titanium chain and potentially pushing up ferro-titanium prices in the coming weeks.

"We're missing a generation of titanium scrap because the works aren't putting anything out," a ferro-titanium trading firm said.

Some market participants previously turned to the US for turnings and other scrap products, but in recent days trading companies have said they have struggled to secure large volumes for September shipment.

Tg-Tv-grade sponge supply has fallen in line with output cuts at large sponge producers because it is made as a by-product of TG100-grade sponge, which is used mainly in aerospace applications. Russia's VSMPO-AVISMA — the world's largest producer of titanium sponge — has cut its 2020 output plans by 32pc to 26,500t across all titanium products, down from its previous guidance of 39,000t.

By Thomas Kavanagh