Ferrotitanium Demand Trends - International Titanium Association

Ferrotitanium Demand Trends
International Titanium Association
Conference
October 7, 2015
Global Titanium Inc.
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Detroit, Michigan
Ferrotitanium
Titanium Scrap
Titanium Powder (~100 micron)
ISO 9001 Registered
Discussion Agenda
Global Steel Production and Titanium Use
Status Quo Forecast for Titanium Demand in Steel
Changing Structure of Automobile Production
Potential Impacts for Titanium Demand
Titanium Availability for Steel
Conclusions
Global Steel Production 2014
Figures are in MT
313 M
1,128 M
119 M
43 M
46 M
Total = 1,649,303,000 MT
Source: World Steel Association
Key Drivers for Titanium in Steel
Oil and Gas Exploration
• Welded pipe
• Approximately 15% of welded
pipe utilizes titanium
• Ti content is roughly 0.13%
• Market dramatically reduced
in 2015 due to global
oversupply of oil
• Global Rig Count down by
39% since September 20141
1
Baker Hughes Rig Count Report
Sources: Baker Hughes and Brent Crude Spot Price
Jun-15
Jan-15
Aug-14
Mar-14
Oct-13
May-13
Dec-12
Jul-12
Feb-12
Sep-11
Apr-11
4000
3500
80
2500
60
2000
40
1500
20
Oil Prices
Global Rig Count
Nov-10
Jun-10
Jan-10
Aug-09
Mar-09
Oct-08
May-08
Dec-07
Jul-07
Feb-07
Sep-06
Apr-06
Nov-05
Jun-05
Jan-05
Rig Count
Global Oil Market
Crude Oil Prices
140
120
100
3000
Key Drivers for Titanium in Steel
Automobiles &
Appliances
• Ultra low carbon steel
• Some use in AHSS
• Use driven by process
technology – die life and
formability
• Ti content is roughly 0.13%
• Roughly 80% of titanium use
in steel is attributable to
automobiles and appliances
Titanium Addition Types for Steel

Produced from
illmenite,
aluminum & steel
scrap, lime, &
fluorspar

Manufactured via
aluminothermic
reaction

Mostly fixed cost
that cannot
compete at lower
prices

Produced from titanium scrap

Melted with iron in an induction furnace

Mostly variable cost that fluctuates with the market
 By-product of
titanium sponge
for aerospace
70% FeTi
Off-Grade
Sponge
35% FeTi
Steel
 Highly variable
chemistry
 Availability varies
with sponge
production
Titanium Requirements for
Steel 2014
Figures are in MT of titanium contained
17,739
40,334
11,954
1,240
2,418
Total = 73,684 MT
Status Quo Titanium Forecast
MT of Ti Contained
90,000
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
2014
2015
2016
2017
2018
2019
2020
2021
2022
Auto Production Forecast
Developed Regions
Developing Regions
120,000,000
100,000,000
4.64%
CAGR
80,000,000
60,000,000
40,000,000
0.91%
CAGR
20,000,000
0
2014
Source: IHS Global Insight
2015
2016
2017
2018
2019
2020
2021
2022
Status Quo Titanium Forecast
MT of Ti Contained
90,000
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
2014
2015
2016
2017
2018
2019
2020
2021
2022
Vehicle Composition Changes
2007 Vehicle Composition
54.60%
2015 Vehicle Composition
34.80%
9.50%
29%
12.70%
0.80%
22.40%
Aluminum & Magnesium
Mild Steel
Advanced HSS
Conventional HSS
Bake Hardenable & Medium HSS
Source: Ducker Worldwide
10.20%
2.50%
23.50%
Aluminum & Magnesium
Mild Steel
Advanced HSS
Conventional HSS
Bake Hardenable & Medium HSS
Automakers Have More To Do
• Fuel efficiency standards have increased
approximately 30% since 2007
• And compliance is 52% in 2015.1
• However, between 2015 and 2025, fuel efficiency
standards are slated to increase by 51%.
• There is still a long way to go
1
Consumer Federation of America 2015 study
How will automakers respond?
Survey of Automakers Preferences on Fuel Efficiency Standards
49%
39%
26%
10%
7%
3%
Engine Efficiency
Electric Vehicles
Diesel Engines
13%
11%
Lightweighting
Downsizing Vehicles
Fuel Cells
Bio-Fuel
Solar and other types of power
15%
Other (includes transmission changes, low rolling resistance tires and autonomous driving systems)
Source: Wards Auto, DuPont Automotive Trends Benchmark Study, conducted by Penton Research
Future Vehicle Composition
2015 Vehicle Composition
2025 Vehicle Composition1
48.5%
34.80%
15.0%
29%
10.20%
2.50%
23.50%
Aluminum & Magnesium
Mild Steel
Advanced HSS
Conventional HSS
Bake Hardenable & Medium HSS
1
This is an estimate based on change history to date.
7.5%
1.0%
8.0%
20.0%
Aluminum & Magnesium
Mild Steel
Advanced HSS
Conventional HSS
Bake Hardenable & Medium HSS
Carbon Fiber
Forecast of Titanium Demand for
Steel
Status Quo Forecast
Reduction Forecast
90000
85000
80000
75000
70000
65000
60000
2014
2015
2016
2017
2018
2019
2020
2021
2022
Supply Assumptions
• Growth in mill products of 4% annually
• Buy-to-Fly ratio of 5 to 1
• Sponge capacity utilization growth from 58% in 2014 to
68% in 2022
• Global Sponge Capacity of 330,000 MT
• Off-grade sponge constant at 15%
• Global scrap utilization rates grow from 50% to 58% of
ingot production by 2022
Titanium Availability for Steel
Status Quo Forecast
Reduction Forecast
110,000
100,000
90,000
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
2014
2015
2016
2017
2018
2019
2020
2021
2022
Titanium Availability for Steel
Scrap
Status Quo Forecast
Reduction Forecast
110,000
100,000
90,000
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
2014
2015
2016
2017
2018
2019
2020
2021
2022
Titanium Availability for Steel
Scrap
Off-Grade Sponge
Status Quo Forecast
Reduction Forecast
110,000
100,000
90,000
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
2014
2015
2016
2017
2018
2019
2020
2021
2022
Source: CRU Ryan’s Notes
12/1/16
6/1/16
12/1/15
6/1/15
12/1/14
6/1/14
12/1/13
6/1/13
12/1/12
6/1/12
12/1/11
6/1/11
12/1/10
6/1/10
12/1/09
6/1/09
12/1/08
6/1/08
12/1/07
6/1/07
12/1/06
6/1/06
12/1/05
6/1/05
12/1/04
6/1/04
12/1/03
6/1/03
12/1/02
6/1/02
12/1/01
6/1/01
12/1/00
Published FeTi Pricing History
Conclusions
• Ferrotitanium market will be well-supplied in the
years ahead with a strong possibility for over-supply
• This should act to keep prices for off-grade scrap
and ferrotitanium depressed.
• Innovation in the titanium industry could counterbalance this oversupply
– Scrap utilization improvement
– Improved buy-to-fly ratios
– New market development
THANK YOU!