War in Ukraine, Pandemic, Supply Chain Bottlenecks Create Challenges for Titanium Distribution Business By Michael C. Gabriele
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itanium distributors and service centers, moving into the second quarter of 2022, are forced to navigate through complex global supply chain issues caused by the Covid-19 pandemic, bottlenecks at ports and warehouses, and disruptions in trade resulting from Russia’s invasion of Ukraine. Based on anecdotal feedback, it appears that, so far, the titanium industry is weathering the storm, but no doubt major challenges lie ahead. Stephen Smith, director of marketing at Banner Industries, Carol Stream, IL, said the company is a major distributor of titanium and other specialized metals for the medical market, including cobalt/ chrome and medical grade stainless steels. Through its Supra Alloys division, Banner supplies titanium bar, plate, and sheet to the aerospace market and has recently added nickelbased aerospace grades to the list of products available from stock. “To date (as of early March 2022), we have not seen any major impact on our business by Russia’s invasion in Ukraine,” Smith said. “The majority of our titanium and specialty metals is melted and rolled in the United States. There will certainly be some volatility in pricing; the recent surge in the cost of nickel and cobalt continues to trend towards the higher numbers last seen in 2018. For distributors, the concern is having too much high-priced inventory when raw material costs go down again.” As for tracking current business conditions, Smith reported that Banner’s sales revenue in the first 32
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TMS Titanium, a stocking distributor of titanium mill products, provided photos of its inventory and warehouse. Founded 15 years ago by Todd Harrison, TMS, based in Poway, CA, has a 10,000-squarefoot facility and 12 employees, with shear, plate saw and lathe production equipment.
quarter of this year is higher than the first quarter of 2021, “but much of this can be attributed to an increase in prices due to escalating costs that are being passed on to the customers, rather than a surge in volume. However, I would say that overall, distributor inventories of titanium and related metals are currently lower than they were a year ago, due in part to constraints from the manufacturing mills.” He explained that the response to federal- and state-mandated social distancing in the workplace due to Covid-19 has reduced mill capacity, at least temporarily, and the subsequent shortage of labor as the economy started to expand in 2021 led to further constraints on output. “Covid-19 has obviously had some negative effect on all aspects of business and the latest Omicron
variant has certainly created more absenteeism than normal, but generally, especially with crosstraining, the impact on sales/output for distributors has been very limited. Many mills simply could not keep up with demand resulting in an even lower than normal on-time delivery performance. Normally, poor ontime delivery is a bonus for those distributors that have inventory on the shelf, and that has certainly been the case over the past year.” Original equipment manufacturers (OEMs) believe that they should deal directly with the mills because of the perceived lower cost of materials, but buying direct leaves these companies subject to ever-fluctuating lead times and erratic deliveries, according to Smith. “Contract Manufacturers (CMOs), particularly the larger ones, would also prefer the lower cost of
