Toho Titanium Weighs Options for New Titanium Sponge Plant

Toho Titanium Factory

Japan's Toho Titanium is contemplating the establishment of a new titanium sponge production facility, potentially in the US, Saudi Arabia, or Japan, as the company revealed to Metalnomist. This move is driven by the expected surge in demand from the aerospace sector, with original equipment manufacturers (OEMs) accelerating aircraft production.

Toho Titanium aims to finalize its decision on the project within this year, although specific locations and production capacities are still under review. While the company has not disclosed the capital expenditure (capex) or a construction timeline, market observers estimate that the investment required would be at least $300 million, with any new site likely taking around four years to become operational.

As a point of reference, Toho Titanium’s joint venture with Saudi firm AMIC, which resulted in a 15,600 t/yr sponge plant in Saudi Arabia, was announced in 2014, commenced construction in 2015, and began commercial production in 2019. The project involved an investment of $420 million.

Among the potential locations, Saudi Arabia is favored for its lower electricity costs. Toho is also considering the US, which would offer proximity to major titanium sponge consumers like Titanium Metals (Timet), ATI, Howmet, and Perryman. Alternatively, the company may expand its existing operations in Japan.

The acceptance of a Japanese sponge plant in the US is uncertain, especially after the opposition to Nippon Steel’s proposed acquisition of US Steel. Furthermore, in March, several US senators introduced a bill to suspend duties on titanium sponge imports, facilitating imports from Japan. This bill, supported by all four major US melters, suggests no immediate plans from Timet or ATI to restart idled domestic capacity at Henderson or Rowley.

Last month, Japanese titanium producer Osaka Titanium announced a ¥30 billion ($191 million) investment to build a new plant in Amagasaki, which will increase its titanium sponge capacity from 40,000 t/yr to 50,000 t/yr.

Investments from Toho and Osaka, along with continued procurement from Russia’s VSMPO-Avisma, could delay the anticipated deficit in the aerospace sponge market. The acceptance of Chinese sponge remains a contentious issue, with concerns about consistent production quality, especially given the industry's emphasis on quality and safety compliance.

Near-Term Challenges vs. Longer-Term Growth

The recovery in demand for widebody aircraft for international travel is set to be the primary driver of titanium consumption in the coming years. European firm Airbus aims to produce 12 aircraft per month by 2028 for its A350 program, while US firm Boeing targets 10 per month by 2026 for its 787 model.

In the short term, supply chains are struggling to match the recovering demand. Airbus CEO Guillaume Faury noted in the company’s April earnings call that although the issues are manageable on a case-by-case basis, the overall environment remains challenging.

Despite downstream production setbacks and persistent supply chain limitations, the demand for titanium sponge upstream remains strong. Melters, forgers, and parts manufacturers are increasing their inventories of titanium products in anticipation of higher demand in the latter half of the year.