Japanese titanium industry increases production, exports – demand rises in 1996 from golf club makers, U.S. aircraft manufacturer

Japanese titanium industry increases production, exports – demand rises in 1996 from golf club makers, U.S. aircraft manufacturer – Titanium

Tsukasa Furukawa

The good news for Japan,s titanium industry is that a big change for the better is taking place in demand for titanium both in Japan and the United States.

Ongoing changes involve revived and newly anticipated demand for titanium from the commercial aircraft industry in the U.S. and Europe; an explosion of sales of golf clubs with titanium heads in both the U.S. and golf-crazy Japan; and expanded use of the metal in a growing number of products including consumer electronics and medicine.

Japan’s two producers of titanium sponge, Sumitomo Sitix Corp. and Toho Titanium Co., report they are operating at full capacity with their production booked through next year.

According to the Japan Titanium Society (JTS), Japan’s 1996 first- half sponge production came to 10,173 metric tons. This year’s total production is expected to reach 20,000 metric tons, up 20 percent from last year’s 16,702, metric tons.

The most conservative estimate for total sponge shipments this year is 20,000 metric tons, up 27.3 percent from 15,715 tons in 1995, which includes 8,000 metric tons in exports, up 55.2 percent from 5.153 metric tons in 1995; and 12,000 metric tons in domestic shipments, up 13.6 percent from 10,562 tons in 1995. Some industry observers say exports may reach 9,000 metric tons.

The two sponge producers have a combined rated capacity of 25,800 metric tons per year. But even if their mills are operated at full blast next year, actual production in terms of volume is expected to stay in the range of 21,000 metric tons or so because of increasing production of high-purity titanium.

As Seiji Kanazawa, executive vice president of Sumitomo Sitix, puts it, U.S. airline companies have experienced increased income and they are now in a position to replace aging fleets.

The first Boeing 777 jetliner took to the skies last year, and the project is beginning to have a significant impact on the titanium market, Kanazawa said, noting that the industry is developing an immunity to the cyclical fluctuations seen in the past because of increasing diversification of titanium use in sporting goods, medical equipment, semiconductors and other product areas.

“The base of the titanium industry is becoming wider,” he noted.

Yasuo Moriguchi, deputy general manager of International Aircraft Development Fund, added Boeing had 250 orders back-logged for the 777 in March. He estimates there will be an average of 50 metric tons of titanium materials consumed before processing.

The executive adds he believes Boeing plans to produce two to three, 777s monthly this year and five to six in 1997. This means that about 3,500 tons of titanium would be needed this year for 777s scheduled to be produced in 1997.

Market demand for titanium for golf club heads in the United States has been accelerating at an “incredible” rate, Tetsuki Nagumo, general sales manager of Sumitomo Sitix affirmed.

It was 1990 when Japanese sporting goods manufacturers Mizuno and Joy first introduced golf clubs with titanium heads on the Japanese market. The current industry estimate is that one million titanium golf clubs were sold in Japan last year and sales are expected to double this year.

Assuming that 500 to 600 grams of titanium are used per head, it means that 500 to 600 metric tons of titanium were consumed for golf clubs last year, Kitaoka said, noting that the U.S. market for titanium golf clubs is much larger. Some U.S. sporting goods manufacturers have set up production in Taiwan, some of which is imported to Japan.

In the first six months of this year, Japanese sponge exports to the United States soared to 2,167 metric tons, surpassing the 1,832 tons for all of 1995. When 2,258 tons shipped to the European Union (EU) and 133 tons to other markets are included, total first-half exports rose to 4,558 tons, nearing 1995’s 12-month total.

“We plan to increase monthly production from our present 980 metric tons to 1,050 metric tons in October and to 1,100 tons if possible,” Nagumo said, indicating that the company has been able to raise export prices by about 20 percent on shipments for next year.

Hiroyuki Uchiyama, senior managing director of Toho Titanium agrees that the U.S. aircraft industry “has completely recovered,” noting that the 777 project is progressing smoothly. In Europe, the European Union has lifted the freeze on its Euro Fighter 2000 project which could lead to future demand for titanium, he added.

The recovery of the U.S. aircraft market could favor Japanese sponge producers. U.S. aircraft manufacturers are very strict about “traceability” of materials they purchase, Toshihiko Saiki, general manager of Toho’s UST Planning Division, emphasized, stating that Japanese companies with long-term relationships with Boeing should benefit. Toho, Nippon, Steel Corp., Nippon Mining & Metals Co., and Mitsui & Co., are investors in the Japanese consortium, Union Titanium Sponge Corp. (UTSC), New York, which takes delivery of 2,000 metric tons of sponge a year from the Henderson plant of Titanium Metals Corp. of America (Timet) which Toho markets in the United States.

Three sponge producers – RMI, Deeside. and Showa Titanium – have withdrawn from production in recent years which is having an impact, psychological and otherwise, on world titanium market prices, the executives noted.

CIS began dumping its stocks on the world market in 1990, but a growing view is that CIS stocks are becoming depleted. in fact, the world’s sponge production capacity has diminished over the last 10 years from 178,000 metric tons to an estimated 108,300 tons at present. According to JTS, Japanese shipments of all titanium mill products in the first six months this year totaled 4,296 metric tons, or 2,441 tons for domestic and 1,855 tons for export.

By market the total broke into: chemical processing industry (CPI), 918 tons (compared with 1,681 tons in 1995 and 1,274 tons in 1994); utilities, 114 tons (777 tons, 755 tons); aerospace, 93 tons (197 tons, 162 tons), service yard, 529 tons (921 tons, 805 tons); marine, 26 tons (99 tons, 84 tons); building & civil, engineering, 93 tons (164 tons, 320 tons), automotive, 16 tons (51 tons, 15 tons); consumer goods including sports & medical products, 558 tons (1,077 tons, 668 tons); others, tons (141 tons, 138 tons).

On the import side, CIS continues to be a dominant supplier of sponge to Japan, shipping 2,483 metric tons in the first six months of 1996 or 85 percent share of total imports of 2,914 tons. But imports from CIS are showing signs of leveling off as the first-half figure translates to an annual rate of about 5,000 tons and is not much greater than the 4,822 tons registered in 1995.

Japanese imports of mill products from North America rose sharply in the first half of 1996 to 991 metric tons – almost equaling the annual import volume of 998 tons in 1995. North America accounted for a dominant share of 95.7 percent of 1,035 metric tons imported here in the first half of 1996. Total imports in 1995 were 1,255 tons compared with 738 tons in 1994.

Production of high-purity titanium, which is finding increasing use in integrated microcircuits, is estimated to have reached about 100 metric tons a year, according to the executives.

It takes much more time, trouble and work to produce high-purity titanium but the product is higher valued. Titanium with a purity as high as “six-nine” or 99.9999 percent is now available. The market price for some types with a purity of 99.99 percent is said to be in the range of 30,000 yen or $275 (at 109-1) per kilogram or $125 per pound.

The uptrend in imports of sponge and mill products is again raising concerns in Japanese industry circles about the “unfairness” in import tariff between Japan which levies only three percent ad valorem and the U.S. which imposes 15 percent.

“The Japanese government has been reluctant to act on our request for correcting the inequality on the excuse of maintaining good U.s. -Japan relations,” one executive said. “No one in the industry has come out in the open to protest, but the unfairness is clear in everybody’s eye.”

COPYRIGHT 1996 Reed Business Information

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