Boeing, Allegheny Technologies Extend Titanium Supply Agreement

Commodity hedging pact covers mil products, creates opportunities for ATI to deliver forgings, castings

Allegheny Technologies Inc. and The Boeing Co. are extending their long-term agreement for titanium products through 2018. The goods to be supplied are titanium mill products (ingots, billets, bars, rectangles, plates, and sheet products) but ATI said the agreement establishes new opportunities for it to supply titanium forgings and castings, too.

The two companies’ existing supply agreement was inked in October 2006 and runs through 2015. It was estimated initially at $2.5 billion and covers titanium mill products.

The volumes to be supplied by ATI in the new agreement, and its estimated value, have not been announced.

Titanium remains a commodity subject to considerable price volatility, with only a handful of primary producers; but it’s a critical material for aircraft builders. Boeing’s rival Airbus recently executed a memo of understanding with the world’s largest titanium producer, Russia’s VSMPO-AVISMA, expanding their existing supplier arrangement to cover collaborative manufacturing and supply of value-added products, and joint-development projects. Those partners also proposed a Vertical Integration Project, by which VSMPO would go beyond supplying titanium raw material and forgings to perform rough machining or pre-machining of titanium parts for Airbus.

Boeing also has a titanium supply agreement with VSMPO, which extends through 2015, as well as with other titanium producers.

"We are pleased to extend our titanium products supply agreement with Boeing," stated ATI chairman Rich Harshman. "The extension agreement solidifies our key-supplier position at The Boeing Company and recognizes today's supply chain requirement to provide more value-added titanium products.

“ATI's strategic investments and acquisitions over the past several years provide the capacity and capability to produce titanium products from raw material (titanium sponge) to value-added mill products, as well as highly engineered and technically complex forgings and castings,” Harshman continued. “ATI is well positioned to benefit from the expected unprecedented growth in Boeing's build rates during the years of this agreement."

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