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3 Recent developments in the world titanium market
There have been a number of important developments in the titanium industry since 2001 — prices have risen, government stocks have been liquidated and capacity utilisation has increased. These events have occurred as a result of strong growth in titanium demand since 2003, especially for aerospace and industrial applications. The use of titanium in industrial applications has increased sharply since 2003, reflecting China’s emergence into the world market and its use of titanium in non-aerospace applications.

This chapter provides information on recent developments in titanium consumption, production, prices, stocks and the availability of raw materials used to produce titanium.
Titanium consumption
Recent developments in titanium sponge consumption, stocks and prices
Titanium sponge is an intermediate form of titanium metal. It is the output of the Kroll process and must be purified and remelted into titanium ingot (there is further discussion of this process in appendix A). Titanium sponge is a useful stage in the supply chain for analysis as it has the most available data and, as it excludes scrap and waste, is a true indicator of production activity.

Since 2001, there have been significant developments in the global titanium sponge industry. The real price of titanium sponge in US dollars has risen by around 130 per cent between 2001 and 2006; this is comparable to the largest historical price increases. The US Government has liquidated its strategic titanium stockpile that it had been holding since the 1950s and there has been a reduction in excess production capacity.

consumption
Titanium’s use in specialised applications, especially the aerospace industry, means that demand for titanium metal has been highly variable. For example, apparent consumption of titanium sponge in the United States is currently in its seventh cycle since 1970 (figure b). The last fall in US apparent consumption occurred in 2002, following the impacts of the 11 September 2001 terrorist attacks in the United States on the airline industry. Recently, apparent consumption in the United States has increased strongly, from 17 000 tonnes in 2003 to 30 000 tonnes in 2006, reflecting a strong recovery in aircraft orders (figure b).

prices
The recent rise in consumption has been accompanied by a rise in price (figure c). This is in contrast to the period 1994–2003 when, despite fluctuations in consumption, the real price of titanium fell on average by 5.5 per cent a year. This period corresponds with the sale of government stocks in the CIS and United States. The sale of stocks was able to offset fluctuations in consumption and allowed for a consistent fall in prices over the period.

In the late 1970s an increase in aircraft orders resulted in price growth averaging 5 per cent a year from 1977 to 1979. In 1980, however, prices increased by 56 per cent to US$37 900 a tonne (in 2006 dollars). This price spike can be attributed largely to an increase in orders for aircraft. Airlines sought to add new fuel–efficient aircraft to their fleet — a response to the oil price rises of the late 1970s. This increase in orders encouraged the hedge buying of titanium sponge and mill products by aircraft manufacturers (Panel on Assessment of Titanium Availability 1983). Capacity expansions in Japan and the United States combined with recession in 1982–83 brought prices back down to around US$16 000 by 1987.

The end of the cold war, which reduced titanium demand for military applications, and a further recession in the early 1990s initiated a downward trend in real prices that continued until 2003. In 2004 and 2005 prices rose by an average of almost 50 per cent a year. In 2006, prices rose by 16 per cent to reach over US$20 600 a tonne, an increase comparable in scale to that of the late 1970s although from a lower base.

stocks
The US Government began accumulating a titanium sponge stockpile in the early 1950s. In 1995, when the stockpile was at its largest, it contained 33 400 tonnes of titanium sponge. The primary purpose of the stockpile was to have titanium sponge available for use in a national emergency. A secondary purpose was to encourage expansion of titanium sponge manufacturing capacity through purchases (Panel on Assessment of Titanium Availability 1983). Between 1997 and 2005 the US Defense Logistics Agency sold the entire stockpile.

A similar accumulation occurred in the Soviet Union. From the mid–1990s, countries in the CIS sold off this stockpile. The depletion of government stockpiles means that new production must replace stockpile sales and also be able to satisfy increases in demand.
Titanium consumption, by end use application and region
Titanium mill products, such as wire, bar, sheet, plate, coil and tube, are a result of the working of ingot. Mill products are the most common form in which titanium is sold to manufacturers to produce final products for consumption. The consumption of mill products is a good indicator of final titanium consumption.

In 2005, the industrial applications sector consumed the most titanium mill products (table 3). It had also shown the strongest rate of growth since 2003 and was the only sector to increase its share of total consumption between 2003 and 2005. The overall growth rate of titanium mill products, 24 per cent, is heavily reliant on the strong growth of the industrial applications sector as no other sector grew by more than 10 per cent and consumption in three of the smaller sectors actually decreased.

In 2005, countries in the OECD — including the European Union, the United States and Japan — accounted for around two-thirds of titanium mill product consumption (table 4). North America was the largest consumer, followed by the European Union. These two accounted for over half of total world consumption. China accounted for a greater percentage of consumption than Japan and actually consumed more titanium than north America and the European Union when aerospace is excluded.

Patterns of consumption of titanium mill products vary significantly from country to country. As Boeing is located in America and Airbus in the European Union, consumption in the aerospace sector is relatively high in these two regions.
Consumption in the industrial sector is fairly evenly spread throughout the globe.

However, as a percentage of domestic consumption, industrial uses are particularly strong in Asia. In China, 50 per cent of total titanium consumption is in the industrial sector. This proportion rises to 70 per cent in Japan, Chinese Taipei and the Republic of Korea.
Titanium production
This section focuses on production of titanium sponge, an intermediate form of titanium metal. As was previously mentioned, titanium sponge is a useful stage in the supply chain to analyse as it has the most available data and, as it excludes scrap and waste, is a true indicator of production activity.

Recently, both production and capacity have been increasing. Production has, however, been increasing faster than capacity. This has led to an increase in utilisation rates. China has had the strongest production growth but still makes up a small percentage of global production.
Titanium sponge production
In recent years the production of titanium sponge has increased (figure d). Since 1993 production has been cyclical, but with an upward trend. This has resulted in an average annual growth rate of 5.2 per cent over the period. This compares with other base metals such as aluminium (average 4.2 per cent over the period) and copper (3.4 per cent).

Production was at its lowest in 1994 when 43 300 tonnes of titanium sponge were produced worldwide. Only a third of sponge capacity was being used at this time. This low in production corresponds with a period of low consumption owing to weak aircraft orders. In 1998, 22 000 tonnes of capacity was decommissioned — 8200 tonnes in the United States, 5000 tonnes in the Russian Federation and 9000 tonnes in Kazakhstan. In 1999 a further 4000 tonnes was decommissioned in both the Russian Federation and Kazakhstan.

Between 2003 and 2006, production increased from 74 000 tonnes to 124 000 tonnes, at an average rate of 19 per cent a year. Recent production increases have occurred in response to the exhaustion of the US and CIS stockpiles and higher titanium sponge prices.

These production increases have been accompanied by increases in productive capacity. In 2003, productive capacity was 102 000 tonnes; by 2006 it had increased to 131 000 tonnes, an average annual growth rate of 9 per cent. The slower growth of capacity relative to production resulted in an increase in capacity utilisation. In 2004, the last year of shipments from the US government stockpile, capacity utilisation rates increased for the first time since 2001. This increase continued and by 2006 utilisation rates were around 95 per cent. This compares with aluminium, another light metal, where utilisation rates in 2006 were 90 per cent.

Since 1993 production of titanium sponge has increased in all countries except for the United States. It is important to note that discussion of average annual growth rates is not truly representative of production activity in the titanium sponge industry. This is because of the cyclical nature of production (figure d). Production of titanium sponge has been strongly influenced by orders for commercial aircraft, which fluctuate depending on investment cycles, macroeconomic conditions and geopolitical events. Average annual growth rates do, however, give an indicator of general trends and there has been a general trend toward increasing production in most countries.

The largest increase in production has been in China, where production increased on average by 18.3 per cent a year between 1993 and 2006, although this was from an extremely small base of only 1500 tonnes, representing 2.3 per cent of total world production. By 2006, Chinese production was 13 000 tonnes, 11 per cent of total world production (table 5).

In Japan, production growth has been particularly strong since 2000. Between 1993 and 1999, production increased at an annual average rate of 4.6 per cent, from 14 000 tonnes to 19 000 tonnes. From 2000 to 2006, production grew at an annual average of 11 per cent, reaching 37 000 tonnes. Over the full period, the average annual growth rate in Japan was 7.5 per cent.

Strong production growth from countries in the CIS can be mostly attributed to a recovery of production in the Ukraine. No titanium sponge was produced in the Ukraine between 1994 and 1997. In 2006, 10 000 tonnes of titanium sponge was produced in the Ukraine. In Kazakhstan, despite a fall in capacity, production increased on average by 8.2 per cent a year between 1993 and 2006. In 2006, Kazakhstan produced 23 000 tonnes of titanium sponge, implying that they were operating at full capacity (table 5). In the Russian Federation, production grew on average by 2.1 per cent a year between 1993 and 2006. This is, however, more indicative of Russia’s high level of production in 1993, around 36 per cent of world production.

In the United States, production fell from 14 000 tonnes in 1993 to 11 000 tonnes in 2006 — an average rate of decline of 1.8 per cent a year. This can be attributed to the closure of almost 21 000 tonnes (71 per cent) of US production capacity during the period. In 2006, 3400 tonnes of new capacity was brought on line in the United States, resulting in production increasing from 8800 to 11 000 tonnes.

The titanium sponge capacity data in table 5 differs from that in table 1 because of the different data sources being used. Table 1 contains data from Roskill (2007), while table 5 contains data from the US Geological Survey. The major difference between the two sources is China’s sponge capacity. Roskill (2007) estimates China’s titanium sponge production capacity in 2006 as 18 000 tonnes, while the US Geological Survey estimates China’s capacity to be 15 000 tonnes.
Titanium powder production
There are no reliable data available on the production of titanium powder. Global powder production is estimated to be no more than 10 000 tonnes a year and is probably more likely to be around 8400 tonnes a year. Most powder production takes place in the Russian Federation, the Ukraine and Japan. Russia and the Ukraine each have production capacity of around 2000 tonnes a year. Exports of titanium powder from Japan average around 3000 tonnes a year, which gives an indication of the volume of production. China also has a titanium powder plant with a capacity of around 1000 tonnes a year. Production in the United States and European Union probably amounts to a few hundred tonnes a year (Roskill 2007).
Mineral sands mining
Ilmenite and rutile resources
In 2006, world reserves of ilmenite and rutile were an estimated 606 million tonnes and 52 million tonnes of titanium dioxide content respectively (table 6). China has the world’s largest reserves of ilmenite, around a third of global reserves; China has no recorded rutile reserves. The quality and accessibility of Chinese reserves is unknown. Australia has the world’s second largest reserves of ilmenite and the largest reserves of rutile — the location of mineral sands deposits in Australia is indicated in map 1 (based on Geoscience Australia information). India has the world’s third largest reserves of ilmenite and rutile.
Ilmenite and rutile mining
The most commonly recovered mineral from heavy mineral sands deposits is ilmenite. In 2006, world production of ilmenite concentrate was around 11.7 million tonnes (table 7). Production from Canada, South Africa and Australia, the top three producers, accounted for around 65 per cent of global production. China and India are also significant producers of ilmenite, producing 1.0 million tonnes and 0.7 million tonnes respectively in 2006.

In 2006, seven countries produced a total of 522 000 tonnes of rutile concentrate. Australia, the world’s largest producer of rutile, accounted for 44 per cent of global production. Western Australia accounts for around half of Australia’s rutile production.
As the vast majority of titanium is not used to produce metal, global production of synthetic rutile was 818 000 tonnes in 2006 (only 7 per cent of ilmenite production).

Australia was the world’s largest producer of synthetic rutile in 2006, producing around 86 per cent of the world total. Australia has been the world’s largest producer of synthetic rutile for at least the past fifteen years. All of Australia’s synthetic rutile is currently produced in Western Australia. However, Austpac Resources has entered into an agreement with BHP Billiton to construct a synthetic rutile pilot plant in New South Wales (3000 tonnes a year) with production to commence in the second half of 2008. A feasibility study for a plant capable of producing 60 000 tonnes of synthetic rutile a year would commence at some stage thereafter. This means that synthetic rutile may be produced outside Western Australia from the second half of 2008.
3 World consumption of titanium mill products, by major end use application, 2003 - 2005
spacer
2003
2005
  
level
share of total
level
share of total
growth rate a
spacer
kt
%
kt
%
%
spacer
aerospace
commercial aerospace
23
35.4
25.5
30.6
5.3
military aerospace
7
10.8
6
7.2
–7.4
total
30
46.2
31.5
37.9
2.5
industrial applications
24
36.9
41.1
49.4
30.9
spacer
consumer and other applications
consumer
7
10.8
6.4
7.7
–4.4
medical
1.5
2.3
1.7
2
6.5
other military
1.9
2.9
2.3
2.8
10
other
0.6
0.9
0.2
0.2
–42.3
total
11
16.9
10.6
12.7
–1.8
spacer
total
65
100
83.2
100
24
spacer
a average annual growth rate from 2003 to 2005.
Source: Roskill (2007).

4 Consumption of titanium mill products, by end use application and region, 2005
spacer
aerospace
industrial
consumer and other
total
level share of total level share of total level share of total level share of total
spacer
kt % kt % kt % kt %
spacer
north america 16.4 52.1 7.5 18.2 1.4 13.2 25.3 30.4
european union 9.8 31.1 8.4 20.4 1.8 17 20 24
china 1.2 3.8 7.6 18.5 3.4 32.1 12.2 14.7
japan 0.6 1.9 7.4 18 2.1 19.8 10.1 12.1
russian federation 3 9.5 1.8 4.4 0.2 1.9 5 6
chinese taipei and
  south korea 0.3 1 6.4 15.6 1.5 14.2 8.2 9.9
other 0.2 0.6 2 4.9 0.2 1.9 2.4 2.9
spacer
total 31.5 100 41.1 100 10.6 100 83.2 100
spacer
Source: Roskill (2007).

5 Titanium sponge production and capacity, by country
spacer
2001
2006
level
share of total
level
share of total
growth rate a
spacer
kt
%
kt
%
%
spacer
production
japan
24.9
30.2
37
29.8
8.2
russian federation
26.1
31.7
30
24.1
2.8
kazakhstan
14.4
17.5
23
18.5
9.8
united states
8.2
10
11
8.8
6.1
china
2.5
3
13.3
10.7
39.7
ukraine
6.3
7.6
10
8
9.7
total
82.4
100
124.3
100
8.6
spacer
capacity
japan
26
25.6
39
29.7
8.4
russian federation
26
25.6
32
24.4
4.2
kazakhstan
22
21.6
23
17.5
0.9
united states
14.8
14.6
12.3
9.4
–3.6
china
6.9
6.8
15
11.4
16.8
ukraine
6
5.9
10
7.6
10.8
total
101.7
100
131.3
100
5.2
spacer
a average annual growth rate between 2001 and 2006.
Source: Roskill (2007), USGS.
6 Reserves of ilmenite and rutile, by country, 2006
spacer
rank
reserves
share
spacer
ilmenite
rutile
ilmenite a
rutile a
ilmenite
rutile
no.
no.
mt
mt
%
%
spacer
china
1
–
200
0
33
0
australia b
2
1
130
19
21
36
india
3
3
85
7.4
14
14
south africa
4
2
63
8.3
10
16
norway
5
–
37
0
6.1
0
canada
6
–
31
0
5.1
0
mozambique
7
7
16
0.5
2.6
0.9
brazil
8
4
12
3.5
2
6.7
united states
9
8
6
0.4
1
0.8
cis/ukraine
10
5
5.9
2.5
1
4.8
vietnam
11
–
5.2
0
0.9
0
malaysia
–
–
0
0
0
0
thailand
–
–
0
0
0
0
sierra leone
–
5
0
2.5
0
4.8
other
–
–
15
8.1
2.5
16
spacer
total
–
–
606
52
100
100
spacer
a TiO2 content. b Geoscience Australia compiles Australia’s ilmenite and rutile reserves.
Source: USGS (2007).
map 1

7 Production of ilmenite, rutile and synthetic rutile, by country, in 2006
spacer
rank
production
share
spacer
ilmenite
rutile
synthetic
rutile
ilmenite
rutile
synthetic
rutile
ilmenite
rutile
synthetic
rutile
no.
no.
no.
kt
kt
kt
%
%
%
spacer
china
4
–
–
1030
0
0
8.8
0
0
australia
3
1
1
2378
232
703
20
44
86
india
6
5
2
685
18
85
5.9
3.4
10
south africa
2
2
–
2384
122
0
20
23
0
norway
5
–
–
850
0
0
7.3
0
0
canada
1
–
–
2787
0
0
24
0
0
mozambique
–
–
–
0
0
0
0
0
0
brazil
11
7
–
121
2
0
1
0.4
0
united states
8
6
–
461
11
0
3.9
2.1
0
cis/ukraine
7
4
–
470
63
0
4
12
0
vietnam
9
–
–
350
0
0
3
0
0
malaysia
10
–
3
165
0
30
1.4
0
3.7
thailand
13
–
–
5
0
0
0
0
0
sierra leone
12
3
–
14
74
0
0.1
14
0
other
–
–
–
0
0
0
0
0
0
spacer
total
–
–
–
11 700
522
818
100
100
100
spacer
Source: TZMI (2007), ABARE.