Vincent Rocco – VSMPO Tirus US
Medical Titanium – A Supplier/Producer PerspectiveTitanium USA 2019September 23, 2019
Vincent Rocco – VSMPO Tirus US
Agenda
• Global Titanium Market and The Medical Portion of It• Titanium Product Forms• Primary Alloys Used• Raw Material Considerations• Quality And Approval Requirements• Key Takeaways
Vincent Rocco – VSMPO Tirus US
Global Titanium Market
0.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
160.0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Thou
sand
MT
Titanium Mill Product Production
JAPAN CHINA EUROPE USA OTHER VSMPO TOTAL
Source: USGS, CTA, JTA, Customs statistics, Internal Estimates
Vincent Rocco – VSMPO Tirus US
Market Breakdown by Industry
Aerospace – 42%
Industrial – 38%
Military – 11%
Medical – 3%Consumer/Other – 6%
Source: Internal Estimates
Vincent Rocco – VSMPO Tirus US
State of the Titanium Industry ‐ 2019
• Mills are running at or close to capacity
• Raw material supply is tight with volatile pricing
• Contract business reigns with little spot activity
• Lead times are extended0
10
20
30
40
50
60
70
Jan‐17 Jan‐18 Jan‐19Wee
ks
Titanium Bar Lead Times
Vincent Rocco – VSMPO Tirus US
Titanium Forecast by Industry
0
50,000
100,000
150,000
200,000
250,000
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
MT
INDUSTRIAL AEROSPACE EMERGING MEDICAL
CAGR• Consumer/Other 4.5%• Medical 3.3%• Aerospace 3.1%• Industrial 1.9%
Source: Internal Estimates
Vincent Rocco – VSMPO Tirus US
Considerations for Medical Titanium Customers
• With global end use markets expected to remain healthy and high capacity utilization, titanium demand should remain strong
• Competition for melt slot allocation • Lead times will likely continue to be extended• Priority will be given to contract customers• Stocking programs become more desirable• Titanium acquisition costs could rise
Vincent Rocco – VSMPO Tirus US
Medical Titanium Product Forms
Wire Bar/Rod Billet
Plate Sheet Powder
Vincent Rocco – VSMPO Tirus US
Titanium Powder Forms
• Angular/Blocky– Less expensive generally– Can use scrap titanium– Ideal for thermal spray
applications– Also good for powder metallurgy
applications– Hazardous to handle and process
• Spherical– More expensive generally– Utilizes prime material
• Wire• Bar/Billet
– Good for 3D printing– Hazardous to handle and process
Vincent Rocco – VSMPO Tirus US
Popular Medical Titanium Alloys• CP Titanium
– Also supplied to the Industrial Market• Ti 6Al‐4V
– In high demand by the aerospace market• Ti 6Al‐4V ELI
– Primarily a medical alloy– Utilizes more sponge in the melt mix
• Ti 6Al – 7Nb– Nb can be expensive and hard to find– Concerns raised over the possible toxic effect on cells by released vanadium ions
initiated the development of non‐vanadium bearing titanium alloy• Ti 15Mo
– Multiple melts are usually required (more than 3X) in some cases– Potential HDI issues with Molybdenum
Vincent Rocco – VSMPO Tirus US
TiO2 Market
• TiO2 Uses– Pigments– Coatings– UV Blocking Products– Titanium Sponge Production
55%
15%
10%
11%
5% 4%
TiO2 Market Share By Application
Paints & Coatings Plastics Pulp and Paper
Cosmetics Metal Others
Source: Grandview Research, TZMI
Vincent Rocco – VSMPO Tirus US
Titanium Sponge IndexJan‐20
09Ap
r‐20
09Jul‐2
009
Oct‐200
9Jan‐20
10Ap
r‐20
10Jul‐2
010
Oct‐201
0Jan‐20
11Ap
r‐20
11Jul‐2
011
Oct‐201
1Jan‐20
12Ap
r‐20
12Jul‐2
012
Oct‐201
2Jan‐20
13Ap
r‐20
13Jul‐2
013
Oct‐201
3Jan‐20
14Ap
r‐20
14Jul‐2
014
Oct‐201
4Jan‐20
15Ap
r‐20
15Jul‐2
015
Oct‐201
5Jan‐20
16Ap
r‐20
16Jul‐2
016
Oct‐201
6Jan‐20
17Ap
r‐20
17Jul‐2
017
Oct‐201
7Jan‐20
18Ap
r‐20
18Jul‐2
018
Oct‐201
8Jan‐20
19Ap
r‐20
19Jul‐2
019
Period of titanium raw materialsupply tightness
Vincent Rocco – VSMPO Tirus US
Vanadium Market
• Uses– Strengthen steel– Strengthens and provides temperature stability for titanium
– Vanadium chemicals used in catalysts, EPDM production, etc.
93%
4%3%
Consumption of Vanadium
Steel Titanium Chemicals
Source: TTP Squared
Vincent Rocco – VSMPO Tirus US
Periods of Volatility
• Array of vanadium market forces– Limited supply – Demand swings up and down make for
a difficult operating environment– Global economic events can
dramatically affect the vanadium market• South African power crisis • Earthquake in China• Oversupply and extended slump in steel demand
• Installation of Chinese rebar standards
Jan‐07
Jul‐0
7
Jan‐08
Jul‐0
8
Jan‐09
Jul‐0
9
Jan‐10
Jul‐1
0
Jan‐11
Jul‐1
1
Jan‐12
Jul‐1
2
Jan‐13
Jul‐1
3
Jan‐14
Jul‐1
4
Jan‐15
Jul‐1
5
Jan‐16
Jul‐1
6
Jan‐17
Jul‐1
7
Jan‐18
Jul‐1
8
Jan‐19
Jul‐1
9
Published V205 Index
Vincent Rocco – VSMPO Tirus US
Market Inflection Points
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018Crude Steel Production Titanium Mineral Production Titanium Aerospace Shipments
Vincent Rocco – VSMPO Tirus US
Quality Requirements Evolution
ASTM F136, ASTM F1472
ASTM + OEM Specs
ASTM + OEM Specs + ASLs
Vincent Rocco – VSMPO Tirus US
Current Quality Environment• ASTM + OEM Specs + ASLs
– OEM specifications have ASTM basis but have specific requirements like higher strengths, tighter chemistries, tighter tolerances, etc.
– Approved Supplier List (ASL) specifies that only designated producers can supply the titanium
– Approving a new source is expensive and time consuming• Provide samples • Testing protocols followed and testing with an independent lab• Product validation program and schedule• Can take 12‐18 months in most cases
– Legacy specifications survive despite industry consolidation• “One company” with several site‐specific specifications
Vincent Rocco – VSMPO Tirus US
Implications for Medical Titanium
• Limits the amount of material available– Product has to meet OEM specification in addition to ASTM specs– If material meets the specification, it then must come from a producer
on the ASL– This applies even the part is produced at a contract manufacturer
• Limits the ability to quickly react to unforeseen events– Material will need to be recertified in many cases– Available titanium may not meet OEM specifications or come from an
approved supplier– Alternate non‐approved supplier could take 12‐18 months to be able
to provide material in tight situations
Vincent Rocco – VSMPO Tirus US
Key Takeaways
• Aerospace and industrial markets will drive the titanium industry as a whole.
• Stocking programs and buffer stock will insulate end users in times of inconsistent requirements.
• The further down the production process the required product form is, the longer the lead time and more expensive it will be.
• Medical titanium alloys are sometimes specialized and thus can compete for melt slots and bring added costs and lead times during high demand periods.
• External markets can have a significant effect on titanium production and raw materials pricing.
• Stringent quality standards can minimize some risk but can also limit the amount of material available and the amount of producers/suppliers that can supply it.
Vincent Rocco – VSMPO Tirus US
VSMPO At A Glance
• The world’s largest titanium producer• Vertically integrated
– Mines machining– All mill products production takes place in Verkhnaya
Salda• Quality approvals from all major aerospace
OEM’s and nearly all major medical OEM’s– Almost 300 total quality approvals– Production plant is certified to ISO 13485
• Global distribution centers– Eastern US, Western US, UK, Germany, and China– Stocking programs and buffer stock– JIT delivery
• US Manufacturing Capability – NF&M International– Quick turnaround capability– Conversion services– Produce medical bar, wire, and precision ground bar
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