On February 24, the escalating conflict between Russia and Ukraine heightened concerns about the titanium supply chain, with major producers of raw materials, metals, and alloys located on the border between the two countries and serving customers around the world.
Sanctions and raw material embargoes could threaten a significant portion of the titanium sponge market. Russia's Avista (VSMPO-Avista) is the world's largest producer of titanium sponges with an annual production capacity of 34,000 tons per year. A large part of the titanium products used in Airbus and Boeing aircraft shells are supplied by the company.
"I don't think we're there yet, but if (the crisis) intensifies, in response to sanctions on it, I think Russia could retaliate against metal exports," said a trader familiar with Avista. , Airbus and Boeing both depend on Avista. We know they have approached competitors due to the political situation.”
Other sponge producers, such as Toho Titanium in Japan, ATI Metals, and RTI International Metals in the United States—can serve as alternative sources of titanium products. European aerospace makers Safran and Airbus have recently acquired Aubert & Duval, signaling they are rethinking their metal supply chains. But given Avisma's market share and the size of its product base, it's hard to break away from Avista entirely. In November 2021, Boeing signed an agreement with Avista to "expand their strategic partnership in the supply and development of new alloys and technologies." The Russian company said at the time that under the agreement, Avista "will continue to be the largest titanium supplier to Boeing commercial aircraft currently and in the future."
Avista has since signed new titanium supply agreements with Spain's Aernnova Aerospace and UK's Barnes Aerospace for 2028 and 2026 respectively.
Commenting on the risk of disruption to titanium supply, Airbus Europe told Argus: "Geopolitical risk is factored into our titanium procurement policy. So we are protected in the short/medium term. This includes both from Russian titanium supplier Azerbaijan. Wismar's direct purchases, but also indirect purchases (through our Tier 1 suppliers)."
Ilmenite supply constraints intensify competition for scrap
Questions have also been raised about Russia's access to titanium feedstock - particularly ilmenite - as IAA assesses its access to Russian titanium. Russia had been importing ilmenite from Ukraine until President Volodymyr Zelensky recently banned ilmenite exports to Russia.
This has given new impetus to the search for alternative feedstocks from African mines and generated new activity in an already tight titanium scrap market.
As a result, the price of Russian-grade ferrotitanium in Rotterdam yesterday rose to $6.75-7.20 per kg from $6.50-6.90 per kg on February 17.
“There are some serious issues with getting enough ilmenite in Avista,” said a trader. “There is a shortage now, so they are looking for scrap. They have been in contact with us. For months, vacuum grade scrap Supply has been tight, making the situation worse."
By the time this article was published, Avista had not responded to Argus' request for comment.
Another scrap trader operating across Eastern Europe said they were reducing their operations in Ukraine: "I will not ship any titanium sponge or scrap to my shredding plant in Ukraine because I fear a wider conflict." Now the whole market is shaken. "
In other words, although the conflict in Russia and Ukraine has affected the scrap market, it has not affected the day-to-day business of ferrotitanium in these two countries. A Russian titanium producer said the impact of the conflict would only be "emotional", adding that consumers would come to the market in panic and make inquiries, but the fundamentals would not change.
Another Ukrainian ferrotitanium producer downplayed the impact on the country's ferrotitanium production and sales: "We are all normal, we are working fine. In Ukraine, everything is calm except for the escalating situation."
