In-depth research report on titanium metal industry: universal metal, soaring
1. "Universal Metal" - Titanium
1.1 Excellent physical and chemical properties, widely used in high-end fields
Titanium (Ti), an element of group IVB in the fourth period of the periodic table, is a silver-white transition metal. The excellent physical and chemical properties make it widely used in high-end fields such as aerospace (airframe and engine), petrochemical industry (condenser, heat exchange tube), national defense industry (missile rocket), and medical biology (artificial bone). The most prominent features of titanium physicochemical properties include:
High melting point and high specific strength. Titanium has a density of 4.51 g/3, which is only 57% of iron. The melting point is 1668°C, which is 138°C higher than that of iron. The specific strength (strength/apparent density) of titanium is the largest among the commonly used industrial alloys. The specific strength of the commonly used TC4 type titanium alloy (Ti-6Al-4V) is 3.5 times that of stainless steel, so titanium is a high-strength and low-quality alloy. Metal.
Giant Titanium Industry
Manufacturer of high-quality titanium rods, titanium wires, titanium forgings, targets and additive manufacturing (3D printing metal powder raw materials), aerospace grade, military quality.
Strong corrosion resistance and good biocompatibility. The outer electron structure of titanium is arranged as 122226 32 36 32 42. Since the ionization potential of the outer valence electrons 4 and 3 is small, it is easy to lose, and it is easy to react with oxygen to form a dense and inert oxide film, thus ensuring the titanium alloy. The body is protected from corrosion by most organic acids. In addition, titanium is safe, non-toxic, and has good biocompatibility, and can be used to make medical tools such as scalpels and artificial bones.
Against the background of inverse globalization, the increasingly intensifying trend of competition between major powers and the clear guidance of the "14th Five-Year Plan" strategic plan, the modernization of China's national defense forces has entered a critical period, and the upgrading of military equipment will accelerate. We believe that in the next 3-5 years, China's military industry will usher in a sustained period of high prosperity. Titanium, as a mainstream new material in the military industry, is expected to enter a period of high-speed development opportunities with the accelerated installation of new fighter aircraft J-20, Yun-20 and supporting missiles, and the growth rate of demand will accelerate.
1.2 High barriers determine high profits, focusing on high-end titanium manufacturing
The titanium industry chain is mainly divided into non-ferrous metals and chemical coatings. The non-ferrous metal chain is: titanium concentrate → titanium tetrachloride → sponge titanium → titanium ingot/titanium alloy → titanium material, and the chemical coating chain is: titanium concentrate → four Titanium chloride → titanium dioxide. The upstream of the two fields share resources such as ilmenite and rutile. More than 90% of the world's titanium concentrate is used to produce titanium dioxide, and only 5% of the titanium concentrate is used to make sponge titanium. About 5.3 tons of titanium concentrate (50% grade) are consumed per ton of titanium sponge production, and 2.3 tons of titanium concentrate are required per ton of titanium dioxide. According to the calculation of Wind data, the demand structure of titanium concentrate in China in recent years shows: sponge titanium: titanium dioxide = 7:93. On the whole, the price of titanium concentrate is mainly determined by the production price of titanium dioxide and the prosperity of downstream chemical coatings and other industries.
For the titanium non-ferrous industry chain, the upstream titanium concentrate resources are relatively abundant, and the core barriers are more concentrated in the research and development and manufacturing process of high-end titanium materials in the midstream. The titanium material manufacturing process is to use titanium sponge reduced by titanium concentrate to obtain titanium ingots by electric furnace melting and casting, and then forging and rolling for many times to obtain final plates, bars and other profiles. The main barriers are reflected in three aspects: capital equipment, R&D technology, and production qualifications:
Capital and equipment barriers: A series of production equipment such as vacuum consumable electric arc furnaces, electron beam cooling bed furnaces, and 10,000-ton fast forging machines used to melt and cast titanium ingots are expensive, and the characteristics of the military business determine that the business income collection cycle is long. Especially for some specific types of military titanium products, it usually takes 5-10 years from the initial design and development to the final mass production, which requires high liquidity for the company.
Technical barriers to research and development: high-end fields such as aerospace and military equipment have strict requirements on the performance of titanium materials. Processing enterprises usually adopt the production mode of “determining production based on sales”. Under the objective conditions of large order volume and short processing time, enterprises need strong research and development capabilities to ensure that orders can be completed on time and with high quality according to customer requirements. At the same time, how to ensure the uniform and stable quality of multiple batches of titanium products from the first step of alloy ingots to subsequent repeated plastic processing and precision casting is a technical challenge in China and even in the world. The root cause of excess capacity at the end and the lack of capacity at the high end.
Production qualification barriers: high-end titanium materials are usually used in key fields such as military fighter aircraft and civil aviation aircraft. If companies need to supply downstream related supporting enterprises, they must obtain a complete military industry three certificates or international airline quality system certification in advance, and these qualification certifications are difficult. Large and long-term, it is difficult for new entrants to shake the existing market competition pattern in the short term.
Multiple barriers have created high profits in the high-end titanium manufacturing process. The plastic processing of military titanium materials is usually up to 10-20 times, and the processing is difficult. , the industry profits are very considerable, worthy of focus.
1.3 Review of the titanium industry: a new round of reshuffle is coming, and the trend of high-end is obvious
As an important raw material for titanium materials, the price and output of sponge titanium can reflect the prosperity of the industry to a certain extent. From a global perspective, 90% of titanium is used in aerospace and industrial applications. The development of the titanium industry is closely related to the macro economy, especially the aviation industry. Looking back on history, the production capacity of international titanium sponge will go through a new cycle about every 5-10 years, and the beginning of each cycle is always accompanied by the recovery of the global economy and the development of the aerospace industry. In 2020, under the influence of the impact of the new crown epidemic and the trend of anti-globalization, the global aviation industry has suffered a heavy blow. Boeing, a world-renowned airline, has seen a sharp decline in orders due to safety issues, and some small airlines have also gone bankrupt one after another during the epidemic. Taking history as a mirror, the global titanium industry is very likely to be in a short period of depression.
Different from the global titanium industry, the domestic large aircraft C919 is still in the stage of high-intensity test flight, and China does not yet have the ability to mass-produce civil aviation aircraft. In the early 21st century, China's titanium demand structure is mainly concentrated in the petrochemical field. Since 2018, with the acceleration of the modernization of the national defense army, the proportion of titanium materials in new military equipment has continued to increase, especially the core structural parts of the new fighter jets J-20 and Yun-20. In recent years, the development of China's titanium industry has been decoupled from the traditional chemical industry, and has gradually been integrated into the military industry, focusing on military fighters and missiles and rockets. Since the 21st century, the development of China's titanium industry can be divided into five stages:
Low volume and price period (2000-2003): In the early 21st century, China's economy developed rapidly, and its excellent performance made titanium favored by the aerospace and petrochemical fields. However, due to the limitations of technology and production equipment, China's sponge titanium production capacity relatively low. In 2003, China's titanium sponge production capacity was only 4,000 tons, and the price range was maintained at 50,000 yuan/ton to 60,000 yuan/ton per ton.
Rapid expansion period (2004-2006): The strong recovery of the global economy, the upgrading of China's economic consumption structure, and the rapid development of the petrochemical industry driven by a large number of infrastructure construction have resulted in a gradual increase in the gap between the supply and demand of titanium sponge in China. The price of sponge titanium rose immediately, reaching a maximum of 300,000 yuan/ton. This has also led to a large number of sponge titanium manufacturers to expand their production capacity. By the end of 2006, the total production capacity of sponge titanium had reached 30,000 tons.
Severe winter period (2007-2015): The overheated investment in the early stage led to a growth rate of demand that was far less than that of production capacity, the market was oversupplied, and the price of sponge titanium plummeted, reaching a bottom of 45,000 yuan/ton in August 2009. Since then, under the stimulus of the 4 trillion yuan policy, although the price briefly recovered to 120,000 yuan/ton, it eventually fell back to a low level due to insufficient effective demand. The eight years here have been the "severe winter period" of China's titanium industry - high production capacity, low demand, and small profits.
Production capacity clearance period (2016-2019): Since 2016, under the guidance of supply-side reform, backward production capacity has been gradually shut down and eliminated, and the industrial concentration has continued to increase. Since 2019, the modernization of China's military equipment has officially entered a period of acceleration. The use of titanium in high-end fields such as aerospace and military equipment has increased significantly, and the industrial structure has gradually shifted from the low-end to high-end in the past. At the same time, affected by the environmental protection storm, the rise in raw material costs helped the price of titanium sponge to rebound, and the price rebounded to 81,000 yuan/ton at the end of 2019.
A new round of shuffling period (2020-): The high price increase in 2019 attracted a large number of titanium companies to expand production and capacity. At the end of 2019, the total production capacity of sponge titanium reached 152,000 tons, a significant increase of 42% year-on-year, but the annual output was only At 86,000 tonnes, capacity utilization fell to a five-year low of 56%. Affected by the epidemic in 2020, the demand for titanium materials for chemical and civilian products has fallen sharply, and the price of sponge titanium has plunged to 52,000 yuan / ton, almost close to the cost line. However, with the gradual control of the domestic epidemic, the demand for chemical titanium materials in the first quarter of 2021 will show a compensatory increase, and the demand for military titanium materials will continue to be hot, and the price of sponge titanium has rebounded to 68,000 yuan / ton.
We believe that the attack of the new crown epidemic will set off a new round of reshuffle in the industry. In the short term, the excess capacity of sponge titanium is in the stage of slow digestion, and its price will be suppressed to a certain extent, and there is relatively little room and possibility for continued decline in the medium and short term; in the medium and long term, the demand for chemical titanium materials has gradually recovered, and the trend of heavy volume of military titanium materials is clear. , the demand structure is further optimized, and the tight supply of small particle titanium sponge for military products is expected to help the price bottom out.
2. Titanium ore: rich in resources and concentrated in production
2.1 The global titanium ore market presents an oligopoly
Titanium resources are abundant in the world. At present, titanium ore resources with industrial application value are mainly ilmenite and rutile, and ilmenite reserves account for as high as 95%. According to USGS data, the total global titanium reserves in 2019 are about 820 million tons, of which 770 million tons are ilmenite and 50 million tons are rutile. China and Australia, the two countries with the largest ilmenite reserves, have reserves of 230 million tons and 250 million tons respectively. In terms of rutile, Australia owns half of the country and has 29 million tons of reserves.
