Business

Japan’s titanium makers expected to win more US business from the war in Ukraine

Traders are betting that Japanese suppliers of titanium will capture significantly more of the global market for the metal as President Vladimir Putin’s invasion of Ukraine pushes Western companies away from Russian producers.

Shares in Toho Titanium and Osaka Titanium Technologies, which are among the only makers of high-grade titanium in the world, are up about 61 and 51 percent, respectively, since the February invasion.

Those gains reflect industry expectations that multinationals, now cutting ties with Russia amid Western sanctions, will boost profits for manufacturers in Japan as global aerospace and defense firms seek suppliers.

The shift comes as analysts forecast prices for the metal could rise by two-thirds to $15/kg within two years – a level not seen since before the global financial crisis – due to sanctions against Russia and Supply disruptions caused by Putin’s war against Ukraine which broadcast commodity prices higher.

Japan is a major supplier of aerospace-grade sponge titanium, accounting for about a fifth of the world market, and supplies more than 80 percent of US imports, according to the US Geological Survey.

The corrosion-resistant metal is primarily used in airplanes, but can also be found in bicycle frames and medical implants.

Stock price change line chart (rebased to 100) showing how Japan's titanium makers take off

US planemaker Boeing recently stopped buying titanium from its largest supplier VSMPO-Avisma, part of Russia’s state-owned defense contractor Rostec, and Japanese suppliers say they have already seen a surge in orders.

Hiromu Tomeba, manager of corporate planning at Toho, said orders from customers including US aerospace supplier Timet have risen 20 percent since mid-March. The company had to turn down further orders because domestic production had been running at full capacity since January. Toho has been working to ramp up production at its joint-venture plant in Saudi Arabia, he said.

Scaling up power-intensive titanium production is more difficult, especially as oil prices have risen and Toho “hasn’t been able to fully pass the cost on to the selling price,” Tomeba said.

“From next year we will probably have to raise prices significantly,” he added.

An Osaka Titanium representative said there had been no increase in orders and it was “very unclear” if the company would make more profit as rising commodity prices have kept the company under pressure.

“The countries with companies certified for production and shipping [titanium] for the aerospace industry are essentially Russia, Ukraine, Kazakhstan and Japan,” said Thanh Ha Pham, an analyst at Jefferies. He has forecast that Toho and Osaka will enjoy a boost in profits from higher sales volumes and rising prices after years of losses.

“[Multinational companies] Expect a drop in Ukrainian and Russian titanium supply as inventories are quite tight,” he said. “The Japanese are able to fill the gap.”

He added that “double-digit” price increases are expected within two to four years and that titanium prices “could almost reach pre-global financial crisis levels” and rise by more than two-thirds from current levels.

“In addition to the aerospace recovery, the industry is expected to reduce long-term dependence on Russia,” Toho’s Tomeba said. “That seems pretty unlikely [players other than Avisma] can fully offset upcoming demand.”

https://www.ft.com/content/c8a3d527-0348-498f-b31c-9a12d978e03c Japan’s titanium makers expected to win more US business from the war in Ukraine

Adam Bradshaw

TheHitc is an automatic aggregator of the all world’s media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials, please contact us by email – admin@thehitc.com. The content will be deleted within 24 hours.

Related Articles

Back to top button