Viewpoint: Imports to drive FeTi prices in 1Q 2019

US ferro-titanium prices are widely expected to decrease early in the first quarter of 2019 on import pressure before trading steady over the remainder of the first half.

Margins between US and European alloy prices are projected to bring down the domestic market early in the year, according to market participants. US ferro-titanium prices averaged a 20-24¢/lb premium over European alloy since 2014 because of higher costs for eastern European and Russian origin alloy. Spreads have rebounded to 5-10¢/lb above typical levels since hitting their lowest recorded level since Argus began assessing European ferro-titanium at a 25¢/lb discount in mid-September.

Western European and US ferro-titanium prices topped out in late September and early October owing to tightness of Russian alloy and subsequently higher costs for scrap. Easing supplies of Russian and eastern European alloy since pressured prices back to pre-rally levels.

Participants expect less powder crushing capacity in western Europe to slightly support prices. Most of the reductions could be made up by greater imports from Russia and eastern Europe, and higher utilization rates from UK-based facilities with active crushers.

In turn, North American producers expect to capture more powder sales.

US mill demand outlooks remain mixed with participants anticipating at most a 5-10pc rise in titanium demand in the first half. Steeper annual contract discounts and consistent demand are projected to undercut already sporadic lumpy alloy orders. Most large contracts settled with double-digit discounts, up in some cases by several percentage points from a year earlier.

Cored wire producers are expected to remain the source of the largest spot market demand. A greater focus on lumpy crushing and less dedicated powder lines could bring powder prices up closer in line with lumpy alloy as well.

US ferro-titanium imports rose by 13pc to 2,425t in the first 10 months of 2018.