TIE - A great article on the fundamentals
Metal Fatigue; Skyrocketing Titanium Prices Raise National - April 11, 2006 Security Concerns · Aviation Week & Space Technology Pat Toensmeier
When the price of titanium surged 317% last year on a wave of strong demand and limited supply, deliveries stretched out to 70 weeks, and the Pentagon's favored metal for high-performance aircraft and top-end weapons seemed on the fast track to becoming scarce.
Titanium, which makes up a significant share of new military aircraft such as the F-22, and is being considered for use in a range of programs, has recently emerged at a critical juncture of several hot-button issues, including U.S. national security concerns over China, skyrocketing price tags for major weapons and an acrimonious debate over "Buy America" rules. At the heart of the issue is the long-term concern that the U.S. maintain access to reasonably priced supplies of titanium.
The Pentagon's Office of Industrial Policy recently looked at whether China's insatiable consumer demand for specialty metals is affecting the Pentagon. Rep. Duncan Hunter (R-Calif.), chairman of the House Armed Services Committee, has spearheaded legislation to restrict the Pentagon's use of foreign titanium, a move critics contend will exacerbate the costs of major weapons. The Defense Dept., meanwhile, has been quietly investing in efforts aimed at driving down the cost of titanium.
The Pentagon's funding of research to develop cost-effective methods of producing and fabricating titanium may be about to pay off. Some efforts show encouraging results and, if successful, have the potential to substantially reduce prices. Experts say, however, that it might be five years before most of these processes reach commercial scale. In the meantime, the Pentagon's weapons buyers are keeping an eye on prices. While there is enough U.S. capacity for military applications, the high cost of titanium could give the Pentagon "sticker shock" as supply contracts that predate the price spike expire.
Titanium has properties that are ideal for military needs. Chief among these are a high strength-to-weight ratio, low density, 40% lighter weight on average than steel, thermal stability at ultrahigh temperatures, shock resistance, ballistic properties and greater corrosion resistance than stainless steel. Titanium alloys have always been critical components of aerospace systems. Their use is expanding in areas as diverse as naval ships, tactical vehicles, artillery and body armor.
As critical as the metal is, it is difficult and expensive to produce. Most fabrication techniques, moreover, are inefficient compared to other materials and yield high quantities of scrap. Estimates of worldwide production of the basic raw material, titanium sponge (named for its resemblance to that porous mass), vary but are low compared to other metals. George Chen, associate professor in the School of Chemical, Environmental and Mining Engineering at the University of Nottingham in England, and codeveloper of the FFC Cambridge process, which the Pentagon is helping to fund (see sidebar), says it's only 50-60,000 tonnes (110-132 million lb.) per year. Sylvain Gehler, managing director of Specialty Metals Co. of Brussels, says it was as much as 100,000 tonnes (220 million lb.) last year. Crude steel production, by contrast, approached 1.13 billion tonnes in 2005.
Sources of supply are also of concern to some analysts. Experts say the U.S. produces about 10% of titanium sponge worldwide. Only one company, Titanium Metals Corp. (Timet) of Denver, manufactures sponge (though other companies supply titanium in ingot form). Most sponge is produced in Russia and two former Soviet republics. Russia accounts for around 30% of supply, while Kazakhstan produces 20% and Ukraine 6%. Japan accounts for most of the rest--about 30%. The Berry Amendment, however, restricts the Pentagon from sourcing materials vital to national defense from foreign companies. Some contractors are concerned that this restriction could add price pressure and delays to military programs, especially if planned capacity increases fall behind schedule. This issue flared up during the protracted conflict over the Pentagon's now-defunct plan to lease 100 commercially derived refueling tankers from Boeing. The Berry Amendment would have forced Boeing--a large consumer of Russian titanium--to use only American-origin metal in the aircraft.
Titanium is also a cyclical business. The inevitability of downturns has, some analysts claim, prevented major expansions of capacity or sustained investments in process technology that might have a long-term impact on supply, cost and production efficiency. Simply put, no company wants to make a huge investment in a technology that might take years to recoup because of periodic downturns. After the last downturn, from 2000-03, many producers shuttered capacity. While most have announced plans to bring capacity back online or expand facilities (Timet, for example, is bringing 8.8 million lb. of new sponge capacity online in Henderson, Nev., next year), concerns persist that in a recovery marked by high global demand, as now, supplies will remain tight, keeping prices high and disrupting defense-procurement schedules.
Worldwide demand for fuel-efficient commercial airliners is responsible for much of the growth in titanium, a change from previous upturns that were driven by military aviation and aerospace. According to figures compiled by Mark S. Kamon, president of Dynamet Inc., a fabricator of titanium alloy, commercial aerospace accounted for 23,000 tonnes (about 50 million lb.) of titanium in 2005, an increase of 21% over 2004. Speaking at the International Titanium Assn.'s annual meeting last September in Scottsdale, Ariz., Kamon projected that demand in this sector will grow by 17% in 2006.
It's not just the volume but the composition of commercial aircraft that's lifting demand. Market leaders Airbus and Boeing use graphite-reinforced epoxy composites in their newest airliners to improve performance. Boeing's 787 Dreamliner, for example, is 61% composite by weight. When aluminum, normally used in airframes, comes in contact with graphite-fiber composite, galvanic corrosion occurs. Titanium is electrochemically compatible with graphite and resists corrosion from galvanic coupling. (Its coefficient of thermal expansion is also more compatible with composites.) Aluminum can be used if coated with a nonconductive material, but as Kevin Slattery, senior principal engineer at Boeing Phantom Works, notes, "These barriers must be maintained for the life of the aircraft, which can be difficult, expensive and require extensive inspection time." The Dreamliner will be about 20% titanium, higher than the industry average of around 5% (including smaller planes). The Airbus A350 uses 9% titanium by weight.
Kamon estimates that in 2005, commercial aerospace accounted for 35% of the global titanium market, while military had a 12% share. Industrial applications like chemical plants were 38% of demand; consumer and emerging markets were 6%; and the balance went to other uses.
Another factor in pricing and supply is growing demand from China and India. Both countries use titanium--popular for its corrosion resistance--in building chemical process plants, a key part of their industrial development, analysts say. But China is expanding its military capabilities, which include domestic production of aircraft, and India has a thriving aerospace industry. China and India also are major steel manufacturers. Producers add titanium (usually scrap) during processing to purify steel. John Carpenter, global director of industrial and emerging markets for Timet, says both nations consume thousands of tonnes of titanium every year, keeping prices high.
The price history of titanium over the past year shows how volatile the market is. After holding steady at $5.75/lb. in 2004, titanium ingot prices soared last year as demand posted double-digit growth. According to data compiled by Platts Metals Week, ingot prices rose in February 2005 to $13/lb.; jumped to $16.50 in March; hit $19.50 in April, and $21 in June. An increase in December brought prices to $24/lb., which held through early February 2006. By March, prices had surged to $30/lb. (see graph). The outlook for 2006 remains strong. Malcolm Ward-Close, head of a titanium research project at QinetiQ, a British defense technology company, says titanium pricing isn't going to soften anytime soon. "For the short-to-medium term it is likely that tonnages will increase steeply and prices will remain high."
Robust titanium prices will affect some defense applications more than others. Airframes and jet engines will not be affected, since performance needs drive specification and cost is an acceptable tradeoff. The airframe of the Lockheed Martin F-22 Raptor, for example, is 39% titanium and each engine is 40% titanium. The U.S. Navy is looking at titanium for lightweight topdeck structures, which would reduce the weight of a ship, improve maneuverability and provide lifecycle advantages. With a projected service life of 50 years for a new ship, cost is balanced by long-term benefits in reduced maintenance and performance. In applications like armor plate for the military's tactical vehicles, high prices have restricted the use of titanium in the past. The war in Iraq, however, is focusing attention on the need to save lives by up-armoring vehicles, so price may not be as much of a stumbling block. The alternative titanium processes that the Pentagon is funding could literally be "life-savers" here, since they have the potential to substantially reduce the cost of the material. Titanium provides equivalent ballistic protection to steel at one-third less weight, reducing the impact of extra armor on vehicle performance.
Pentagon concerns about supply and pricing are evident in the objectives of one research program, the Titanium Initiative, started by the Defense Advanced Research Projects Agency (Darpa) in 2002. Its goal is to develop processes that increase production, create markets to sustain demand and reduce prices. The program, budgeted for $18 million over five years, is funding work on four titanium extraction processes that if commercially viable could lower prices and improve fabrication.
One goal of the initiative is to reduce the cost of titanium to less than $4/lb. The program also seeks "establishment of a U.S.-based, high-volume, low-cost, environmentally benign production capability enabling widespread use of titanium and its alloys," and development of "unique, previously unattainable titanium alloys, microstructures and properties that enable new high-performance applications," Darpa stated in response to e-mailed questions. (Darpa declined an interview for this article.) The agency wants to move these technologies rapidly to the military services. "We aim to revolutionize the use of titanium in defense systems."
Other agencies sponsoring projects include the Office of Naval Research (ONR), whose efforts also involve welding technologies, the Air Force Research Laboratory, which works with the Metals Affordability Initiative, a consortium of 17 businesses that includes titanium producers, fabricators and manufacturers, and the Army's Armament Research, Development and Engineering Center.
This is not the first time the Pentagon has funded titanium research with an eye toward applications beyond aerospace. "The Navy had some serious programs in the 1980s when we were trying to keep up with the Soviets," says Julie Christodoulou, program officer at ONR. "We had efforts in alloys, design and fabrication for various applications, including submersibles. When the Cold War ended, we asked if this was still viable. The answer then was no, and a lot of projects were discontinued."
ONR began researching titanium again in 2004. Christodoulou says potential applications include the island tower, hatches, and elevator and hangar doors on the new CVN-78 aircraft carrier, which could reduce topside weight by tens of thousands of pounds or more.
The Navy has already tapped the corrosion resistant properties of titanium for seawater pipes on the USS San Antonio, a 684-ft. amphibious transport ship commissioned on Jan. 14. The piping is for bilge and ballast control. The project dates back five years. Though more expensive than steel, titanium was specified because the piping is deep within the ship and difficult to reach. Christodoulou says reduced maintenance justifies higher cost.
The Army has been incorporating titanium into a range of applications, including ballistic shields and structural components on vehicles and weapons systems. One application is the new M777 ultralight field howitzer, a 155mm. gun that uses titanium castings for a near 50% reduction in weight compared to the M198 howitzer it replaces. The M777, a joint project by the Army and Marine Corps, weighs about 8,240 lb. and incorporates 3,200 lb. of titanium per gun. The M198 howitzer, by contrast, weighs 16,000 lb. BAE Systems, the prime contractor, will produce 1,000 of the guns.
Using one of the Darpa-funded extraction processes, the Army will also field titanium plates later this year in a retrofit kit for the Stryker armored vehicle. The plate will be fabricated by ADMA Products Inc., Hudson, Ohio, from titanium powder derived by the Armstrong Process and supplied by International Titanium Powder (see sidebar) of Lockport, Ill. The plate, which includes transparent armor (a laminate of bullet-resistant glass, polycarbonate and acrylic), mounts around the turret to protect soldiers manning the vehicle's .50 machine gun. It is reportedly the first commercial use of a new titanium process technology funded by Darpa.
Darpa and others are also looking at market developments to increase titanium supply. Increased demand coupled with advances in production and fabrication could make the metal more of a commodity, like aluminum.
evertheless, the high price of titanium and expiration of long-term supply contracts will affect the cost of weapons, and this could force the Pentagon to reconsider its use in some applications.
"In the next couple of years, as long-term agreements expire, they'll be replaced by new agreements that more closely resemble market pricing," says Boeing's Slattery. "The Defense Dept. will see a steady increase in what it pays for titanium. The government has guaranteed that defense-rated programs will get titanium, but they're not guaranteed to get it at any price."