According to Titanium: Market Outlook to 2018, published by Roskill, the volatility of the market is due to an increasingly differentiated industry. In Europe and North America, aerospace applications regularly account for more than 60% of demand. Production of titanium sponge and mill products in these regions is also largely orientated towards the aerospace market. The rapid growth in production of sponge and mill products in China serves the growing domestic demand in industrial applications, which accounted for more than 80% of consumption in 2012.

Aerospace remains the principle distinct market for titanium, accounting for a buy-in weight of around 60 kt of mill products in 2012. The new generation of large passenger aircraft, the A380 and A350 from Airbus and the B787 from Boeing use greater volumes of carbon fibre reinforced polymers, or CFRPs, in the airframe. CFRPs are compatible with titanium, but not with aluminium, which ensures that titanium’s position as a key material in the manufacture of aircraft is assured and growing. The Russian company, VSMPO, has emerged as the leading supplier of mill products to the aerospace industry, supplying in excess of 20kt in 2012.

However, the use of titanium in industrial applications is more price sensitive, as specifications are not as rigorous as they are in aerospace and there is competition from other high performance alloys. This price sensitivity is more apparent in Europe and North America than in China, which now accounts for half of all demand in industrial applications. It appears that titanium is selected in preference to (less costly) materials for use in Chinese industrial plants.

After falling to 124kt in 2009, global supply of titanium sponge rose by an average of 26.5% per year from 2010 to 2012 to reach 241 kt; an estimated 20kt surplus in demand. However, much of this surplus was in China and was for industrial-grade material. Aerospace grade sponge is mainly produced in Japan, Russia, the USA and Kazakhstan and, according to Roskill, current and forecast supply is more than adequate to meet demand as there is some unused capacity overhanging the market. US imports account for more than half the world trade in titanium sponge and US melting companies continue to rely heavily on imports from Japan and Kazakhstan, although shipments from the latter country are falling as an increasing proportion of output is processed locally.