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Ferrotitanium Demand Trends
International Titanium Association Conference
October 7, 2015
Global Titanium Inc.
• Detroit, Michigan• Ferrotitanium• Titanium Scrap• Titanium Powder (~100 micron)• ISO 9001 Registered
Discussion Agenda
Global Steel Production and Titanium Use
Status Quo Forecast for Titanium Demand in Steel
Changing Structure of Automobile Production
Potential Impacts for Titanium Demand
Titanium Availability for Steel
Conclusions
Global Steel Production 2014Figures are in MT
1,128 M
313 M
43 M
119 M
46 M
Source: World Steel Association
Total = 1,649,303,000 MT
Key Drivers for Titanium in Steel
Oil and Gas Exploration• Welded pipe
• Approximately 15% of welded pipe utilizes titanium
• Ti content is roughly 0.13%
• Market dramatically reduced in 2015 due to global oversupply of oil
• Global Rig Count down by 39% since September 20141
1 Baker Hughes Rig Count Report
Global Oil Market
20
40
60
80
100
120
140
1500
2000
2500
3000
3500
4000
Jan-
05
Jun-
05
Nov
-05
Apr-
06
Sep-
06
Feb-
07
Jul-0
7
Dec-
07
May
-08
Oct
-08
Mar
-09
Aug-
09
Jan-
10
Jun-
10
Nov
-10
Apr-
11
Sep-
11
Feb-
12
Jul-1
2
Dec-
12
May
-13
Oct
-13
Mar
-14
Aug-
14
Jan-
15
Jun-
15
Oil
Pric
es
Rig
Coun
t
Global Rig Count Crude Oil Prices
Sources: Baker Hughes and Brent Crude Spot Price
Key Drivers for Titanium in Steel
Automobiles & Appliances • Ultra low carbon steel
• Some use in AHSS
• Use driven by process technology – die life and formability
• Ti content is roughly 0.13%
• Roughly 80% of titanium use in steel is attributable to automobiles and appliances
Titanium Addition Types for Steel
Steel
35% FeTi
70% FeTi
Off-Grade Sponge
Produced from titanium scrap
Melted with iron in an induction furnace
Mostly variable cost that fluctuates with the market
Produced from illmenite, aluminum & steel scrap, lime, & fluorspar
Manufactured via aluminothermicreaction
Mostly fixed cost that cannot compete at lower prices
By-product of titanium sponge for aerospace
Highly variable chemistry
Availability varies with sponge production
Titanium Requirements for Steel 2014
Figures are in MT of titanium contained
40,334
17,739
1,240
11,954
2,418
Total = 73,684 MT
Status Quo Titanium Forecast
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
2014 2015 2016 2017 2018 2019 2020 2021 2022
MT of Ti Contained
Auto Production Forecast
0
20,000,000
40,000,000
60,000,000
80,000,000
100,000,000
120,000,000
2014 2015 2016 2017 2018 2019 2020 2021 2022
Developed Regions Developing Regions
0.91%CAGR
4.64%CAGR
Source: IHS Global Insight
Status Quo Titanium Forecast
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
2014 2015 2016 2017 2018 2019 2020 2021 2022
MT of Ti Contained
2007 Vehicle Composition
0.80%
54.60%9.50%
12.70%
22.40%Aluminum & MagnesiumMild SteelAdvanced HSSConventional HSSBake Hardenable & Medium HSS
2015 Vehicle Composition
2.50%
29%
34.80%
10.20%
23.50%Aluminum & MagnesiumMild SteelAdvanced HSSConventional HSSBake Hardenable & Medium HSS
Vehicle Composition Changes
Source: Ducker Worldwide
Automakers Have More To Do
• Fuel efficiency standards have increased approximately 30% since 2007
• And compliance is 52% in 2015.1
• However, between 2015 and 2025, fuel efficiency standards are slated to increase by 51%.
• There is still a long way to go
1 Consumer Federation of America 2015 study
How will automakers respond?
15%
3%
7%
10%
11%
13%
26%
39%
49%
Survey of Automakers Preferences on Fuel Efficiency Standards
Lightweighting
Engine Efficiency
Electric Vehicles
Diesel Engines
Downsizing Vehicles
Fuel Cells
Bio-Fuel
Solar and other types of power
Other (includes transmission changes, low rolling resistance tires and autonomous driving systems)
Source: Wards Auto, DuPont Automotive Trends Benchmark Study, conducted by Penton Research
2015 Vehicle Composition 2025 Vehicle Composition1
7.5%
15.0%
48.5%
8.0%
20.0%1.0%
Aluminum & MagnesiumMild SteelAdvanced HSSConventional HSSBake Hardenable & Medium HSSCarbon Fiber
Future Vehicle Composition
2.50%
29%
34.80%
10.20%
23.50%Aluminum & MagnesiumMild SteelAdvanced HSSConventional HSSBake Hardenable & Medium HSS
1 This is an estimate based on change history to date.
Forecast of Titanium Demand for Steel
60000
65000
70000
75000
80000
85000
90000
2014 2015 2016 2017 2018 2019 2020 2021 2022
Status Quo Forecast Reduction Forecast
Supply Assumptions
• Growth in mill products of 4% annually
• Buy-to-Fly ratio of 5 to 1
• Sponge capacity utilization growth from 58% in 2014 to 68% in 2022
• Global Sponge Capacity of 330,000 MT
• Off-grade sponge constant at 15%
• Global scrap utilization rates grow from 50% to 58% of ingot production by 2022
Titanium Availability for Steel
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
100,000
110,000
2014 2015 2016 2017 2018 2019 2020 2021 2022
Status Quo Forecast Reduction Forecast
Titanium Availability for Steel
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
100,000
110,000
2014 2015 2016 2017 2018 2019 2020 2021 2022
Scrap Status Quo Forecast Reduction Forecast
Titanium Availability for Steel
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
100,000
110,000
2014 2015 2016 2017 2018 2019 2020 2021 2022
Scrap Off-Grade Sponge Status Quo Forecast Reduction Forecast
Published FeTi Pricing History12
/1/0
0
6/1/
01
12/1
/01
6/1/
02
12/1
/02
6/1/
03
12/1
/03
6/1/
04
12/1
/04
6/1/
05
12/1
/05
6/1/
06
12/1
/06
6/1/
07
12/1
/07
6/1/
08
12/1
/08
6/1/
09
12/1
/09
6/1/
10
12/1
/10
6/1/
11
12/1
/11
6/1/
12
12/1
/12
6/1/
13
12/1
/13
6/1/
14
12/1
/14
6/1/
15
12/1
/15
6/1/
16
12/1
/16
Source: CRU Ryan’s Notes
Conclusions
• Ferrotitanium market will be well-supplied in the years ahead with a strong possibility for over-supply
• This should act to keep prices for off-grade scrap and ferrotitanium depressed.
• Innovation in the titanium industry could counter-balance this oversupply– Scrap utilization improvement– Improved buy-to-fly ratios– New market development
THANK YOU!