Japanese producer Osaka Titanium Technologies plans to boost its titanium sponge capacity, spurred by higher demand from the aviation industry that has led to it posting higher sales and profits.
It plans to invest ¥30bn ($191mn) to set up a new plant in Japan's western Amagasaki city to meet growing demand for titanium sponge. This will lift its production titanium sponge capacity in Amagasaki to 50,000 t/yr from 40,000 t/yr currently.
Most of the demand for its major product titanium sponge comes from the aviation industry, which consumes a significant amount of titanium sponge to produce things like engine components.
This demand contributed to its net sales and net profit of around ¥55.3bn and ¥8.3bn respectively in the April-2023-March 2024 fiscal year, up by 28pc and 73pc on the year, it said on 24 May. Export and domestic sales were up by around 40pc and 20pc on the year respectively, but Osaka Titanium did not disclose further details like sales volumes.
Osaka Titanium operated its Amagasaki plant at almost full capacity throughout 2023-24 to produce titanium sponge, meeting "expanded demand" from the aviation industry.
Osaka has reached a tentative decision to build the new plant near its existing Amagasaki facility after considering other production sites, including overseas. This is largely because the company can start commercial operations faster by leveraging infrastructure at its existing plant, an Osaka Titanium representative told Argus. The company can also minimise construction costs, he added.
Firm demand, especially for use in small aircraft, has lifted Osaka Titanium's financial outlook for 2024-25, with it predicting net sales and profit to come in at ¥57bn and ¥11bn respectively.
The global aircraft market for smaller airplanes is expanding after recovering from sluggish demand caused by the Covid-19 pandemic. The medium- to large-sized airplane market will also make a full-scale recovery in the medium term, the company said.
This is despite growing concerns among materials suppliers about demand in the near term after US airplane maker Boeing had to halt plans to produce 50/month of its flagship 737 MAX aircraft between 2025 and 2026. This was brought on by a US Federal Aviation Administration decision to cap Boeing's output at 38/month following a mid-air panel blowout in early January that resulted in the temporary grounding of over 170 737 MAX 9s.
"We do not recognize any immediate concerns," the Osaka Titanium representative said. "Our clients request us to produce as much as possible."
