Titanium supply threatened by Ukraine conflict: Update

Adds comment from VSMPO in the fourth paragraph

The escalating conflict between Russia and Ukraine is fuelling concerns about the titanium supply chain, with key producers of raw materials, metal and alloy located on both sides of the border and serving a global customer base.

Sanctions and raw material embargoes could threaten a substantial portion of the titanium sponge market. Russia's VSMPO-Avisma is the world's largest titanium producer, with nameplate capacity of 34,000t/yr, and supplies a large portion of the titanium products used by Airbus and Boeing in their aircraft hulls.

"I don't think we're there yet, but if [the crisis] is exacerbated I think the problem could arise from a retaliation from Russia on metal exports [in response] to sanctions on their individuals," a trader familiar with VSMPO said. "The interesting issue is that Airbus and Boeing are reliant on VSMPO. We know they have already approached competitors because of the political situation," he said.

A spokesperson for VSMPO said they neither buy or receive any ilmenite from Ukraine and now they purchase all their necessary raw materials from miners in countries like Vietnam, Mozambique and Kazakhstan, among others.

Other sponge producers — such as Japan's Toho Titanium, and ATI Metals and RTI International Metals in the US — could be used as alternative sources for titanium products. European aerospace manufacturers Safran and Airbus recently purchased Aubert & Duval, suggesting they are reconsidering their metal supply chains. But it is difficult to fully pull away from VSMPO, given the scale of its market share and product base. In November, Boeing signed an agreement with VSMPO to "expand their strategic partnership" relating to supply and development of new alloys and technologies. Under the agreement, VSMPO "will remain the largest titanium supplier for current and future Boeing commercial airplanes", the Russian company said at the time.

Since then, VSMPO has signed fresh titanium supply deals with Spain's Aernnova Aerospace stretching out to 2028 and UK-based Barnes Aerospace stretching to 2026.

Commenting on the risk of titanium supply disruptions, Europe's Airbus told Argus "the geopolitical risks are integrated into our titanium sourcing policies. We are therefore protected in the short/medium term. The exposure is a mix of Airbus' direct sourcing from the Russian titanium supplier VSMPO and the indirect sourcing (through our Tier 1 suppliers)."

Boeing had not responded to Argus' request for comment by the time of publication.

Ilmenite supply constraints fuel more competition for scrap

While international aerospace companies assess their access to Russian titanium, questions are also being raised about Russia's access to the raw materials it uses to produce titanium — in particular ilmenite, which it had imported from Ukraine until President Volodymyr Zelensky banned its export to Russia recently.

This has given new impetus to the search for alternative feedstock from African mines, and generated fresh activity in the already-tight titanium scrap market.

As a result, Rotterdam prices for Russian grade ferro-titanium had risen to $6.75-7.20/kg yesterday, up from $6.50-6.90/kg on 17 February.

"There are some severe problems with securing enough ilmenite for VSMPO," a trader said. "There's a shortage, so they're trying to find scrap. They've been in touch with us. There's been tightness on vacuum-grade scrap for months and this makes it much worse."

VSMPO had not responded to Argus' request for comment by the time of publication.

Another scrap trader who operates across eastern Europe said they are reducing operations in Ukraine: "I won't deliver any sponge or scrap to my crushing plant in Ukraine because I am afraid of a wider conflict. The whole market is shaken now."

That said, despite the impact on the scrap market, the Russia-Ukraine conflict has not yet impacted day-to-day ferro-titanium business in either country. One Russian titanium producer said the impact of a conflict would only be "emotional", adding that customers will come to the market panicked and asking questions, but the fundamentals will not change.

Another Ukrainian ferro-titanium producer played down any impact on ferro-titanium production and sales in the country: "Everything is fine with us, we are working normally. In Ukraine, everything is also calm, except for the fact that the situation is escalating."

By Thomas Kavanagh