Boeing crisis casts uncertainty over titanium, tantalum

Uncertainty hangs over European price direction for titanium and tantalum, as market participants wait for more clarity about how Boeing's decision to suspend production of its 737 Max series jet will impact demand in the first quarter of 2020.

The suspension is expected to have a significant impact on Boeing's supply chain for engines and other core components, which form a major end-user sector for these two minor metals. The impact is likely to become clearer in the next three months, but this week market participants were already talking of delayed purchasing, and some titanium negotiations that were expected to be concluded in late 2019 have dragged into 2020.

Argus yesterday assessed European prices for aerospace-grade sponge titanium at $8.70-9.20/kg duty unpaid Rotterdam, unchanged from 31 December, having hovered around this level for several weeks now. But some larger producers focused on long-term contracts were this week looking at prices being capped at $9/kg duty unpaid.

The monthly assessment for standard aerospace alloy Ti-6Al-4V ingot was at $15.75-16.50/kg in-warehouse Rotterdam on 2 January, down by 25¢/t from 2 December at the top end of the range, and some buyers are pushing for further price cuts. Fob Rotterdam prices for commercially pure titanium ingots have also slipped since 2 December, assessed yesterday at $11.00-11.50/kg for CP grade 1, down from $11.20-11.80/kg, and at $10.00-10.50/kg for CP grade 2, down from $10.20-10.80/kg.

Tantalum market participants this week voiced concerns about production schedules for Boeing 737 Max engines already being disrupted, but European prices are holding steady, awaiting clearer direction from the aerospace sector. Argus assessed prices for tantalum bar and ingots at $258-270/kg duty unpaid Rotterdam on 2 January.

Ripple effects are already being felt elsewhere in the sector, with Ryanair last week indicating that its first scheduled delivery of 737 Max aircraft is likely to be delayed and significantly revised down in quantity from the 58 initially booked for delivery by the summer.

The US Federal Aviation Administration (FAA) grounded all Boeing 737 Maxes on 13 March following the crash of Ethiopian Airlines flight 302. That came after the crash of a Lion Air 737 Max after taking off from Indonesia's capital on 29 October.

The decision to suspend manufacture of the model as of January 2020 removes one of Boeing's key growth areas. The firm previously said it would increase production of 737 Maxes from 42 to 57 a month by late 2020.

By Polina Sparks and Ellie Saklatvala