London, September 19th (Argus) - Despite the almost complete halt of imports from Russia, titanium iron producers in the UK and the EU are still facing significant pressure from weak steel demand, tight profit margins even turning negative, and the resulting price decline.
The price of titanium iron has maintained a continuous downward trend for nearly a year. On September 18th, the Argus European Titanium Iron Index was assessed at a landed price of 4.60-4.90 US dollars per kilogram in Rotterdam, lower than 6.55-6.80 US dollars per kilogram on September 19th, 2024, approaching a five-year low.
From the perspective of producers' profit margins, the price of titanium iron itself is not as important as the price difference with titanium scrap or sponge titanium raw materials, but the price remains a clear indicator of the current market predicament.
On September 11th, the price difference between the Argus European Titanium Iron and Titanium Scrap assessment price dropped to 2.55 US dollars per kilogram, the narrowest since December 2023 - when Russian titanium iron was still exerting significant downward pressure. On September 18th, this price difference rebounded to 2.75 US dollars per kilogram, as the price of titanium scrap dropped to an onshore price of 1.80-2.20 US dollars per kilogram in the northwestern part of Europe, lower than 2.00-2.40 US dollars per kilogram a week earlier.
Industry insiders said that after months of pressure on titanium iron producers to reduce raw material costs, the price of scrap fell last week. The inventory sell-off at a waste processing factory in Western Europe may also have driven the recent decline in scrap prices. The supply of 5-grade titanium and pure titanium solid materials remains tight.
However, there is a time gap between the purchase, transportation, processing and smelting of scrap, meaning that the current supply of titanium iron is produced using scrap purchased one or two months ago. In a long-term downward market, the profit margins of titanium iron production face huge pressure.
The market generally believes that 4.60 US dollars per kilogram is the price floor, but when the spot demand of steel mills is extremely low, the theoretical break-even point has become a secondary consideration. In addition, due to the distortion of index-linked discounts, a large part of the orders of some producers are long-term contracts far below the market value.
Several titanium iron producers in the UK, Central Europe and the Baltic region have reduced their production capacity, only meeting the small demand of long-term contracts and the spot market (on-demand supply). However, in the absence of clear signs of market recovery, producers are reluctant to produce titanium iron using relatively more expensive raw materials and accumulate inventory.
A source said: "Not all titanium iron producers can survive through this period." Other sources also agreed with this view.
A company source from the UK producer Transition Metals told Argus that due to retirement or other factors, the company had some natural staff reductions, and the current depressed market environment did not need to fill these vacant positions. But the company denied the rumor in the market that it had laid off 11 employees.
