Taking off: nickel alloys are in demand, while aircraft orders could help titanium take off. It appears as if the atmosphere for specialty metals is improving

Recycling Today, Jan, 2004 by Curt Harler

"Russian titanium producers, being the low cost producers, have a major impact on the world marker and already have about 30 percent of the American titanium market," Freilich says.

"The Russian titanium producers will make it impossible to sustain the current number of western titanium producers," Freilich predicts. "Someone will have to go."

While there is hope for an upswing in the auto and construction markets, optimism is mixed about aerospace in the short-term. For airlines, the trend looks favorable for operators who use the right aircraft.

Freilich gathered statistics that show an airline can break even filling 60 seats on a small plane, while break-even on an Airbus A-320 would be 119 seats. JetBlue's Embraer 190s cost 15 percent to 20 percent less to operate than a Boeing 737-600. In June of 2003, regional jets were used for 36 percent of all U.S. domestic flights, up from 19 percent in 2000. Use of narrow-bodied jets fell from 71 percent to 57 percent during the same time.

NICKLE SHINES. While titanium could be hit-or-miss, the market for nickel-based products is as shiny as a new sheet of stainless steel.

"The market's good," remarks Jerry Turchin, president of California Metals & Electronics in El Cajon.

"I think 2004 will be a very good year in the ferrochrome market," agrees Larry Pryor, Sudamin Corp., Sewickley, Pa.

"Ferrochrome prices are going up," Pryor continues. The stainless steel market is gathering its strength from the automotive and the construction sectors. Pryor expects both areas to be strong throughout 2004.

"Nickel-based scrap enjoyed good demand at the start of 2003, only to falter in the beginning of June," Freilich says. "The vacuum melters delayed shipments of scrap or canceled orders entirely due to canceled orders and stretch-outs from their customers."

"I anticipate some spotty business starting in late first quarter, extending into the second quarter then more of the same afterwards," Freilich says. Overall, he predicts 2004 will be a repeat of 2003, with the exception of the ferro-titanium grades.

Fred Knox, president of The Mercer Co., Warren, Ohio, agrees nickel and stainless steel prices are going up nicely, but he says that the boost is more thanks to the underlying commodities going up than to conditions in the scrap marker.

"Stainless scrap prices will be fine as long as the U.S. dollar is under pressure," Knox says. "The world situation is following the copper markets and even gold to some extent," he adds. Knox says that he does not see any strengthening of the U.S. dollar until the government allows interest rates to increase. "That is not happening soon."

For a scrap dealer like Knox, the important thing is that material is moving.

"We are working on margins. Like everyone, we would like to see some stability. Right now it is hard to project how the market will go. No one wants to get stuck with material. Everyone is playing it as close to the bone as they can," Knox says.

Turchin agrees. "I don't question the reasons (for the up market). We're rust going to go with the flow.