Titanium industry is optimistic about two pioneers of high-end titanium materials

The use of titanium in the military field includes aircrafts, warships, weapons, and weapons. The main consumption of titanium in the military field is still concentrated in the aircraft

Titanium, aerospace military's excellent metal materials, and other iron, aluminum, vanadium or molybdenum and other elements caused by the creation of high-strength light alloy, was used in aviation, aerospace, military, warships and other high-tech and military fields, known as For "space metal" and "marine metal", it is an important "strategic metal" that is indispensable for improving the level of national defense equipment. Titanium prices rose, titanium companies benefited from revaluation of inventory values ​​and improved product profitability; the high-end titanium market in China is on the verge of explosive growth in demand for titanium for military use, titanium for civil aviation, and titanium for nuclear power applications. The industry barriers are high, and high-end titanium companies benefit .

State Gold Securities (600109) Luzhou

Titanium, aerospace military superior metal materials. Titanium has the characteristics of high melting point, small specific gravity, good toughness, fatigue resistance, corrosion resistance, low thermal conductivity, high and low temperature tolerance performance, and low stress under quenching and hot conditions. At present, titanium and other iron, aluminum, vanadium or molybdenum and other elements to create a high-strength light alloy, was used in aviation, aerospace, military, warships and other high-tech and military areas, known as "space metal", " "Marine metal" is an important "strategic metal" indispensable for improving the level of national defense equipment.

Titanium is mainly used in the field of commercial aviation and military industry. In 2011, the world production of titanium was 1,480,020 tons, and the consumption was 108,100 tons. The main applications were: commercial aviation accounted for 43%, industry 48%, military 6%, and emerging markets 3%. Titanium in China is mainly used in industry, where chemical industry demand accounts for 50%, electricity (12%), metallurgy (4%), sports leisure (9.4%), salt (4.2%), and aerospace (8.5%) The proportion is also higher.

The use of titanium in the military field includes aircrafts, warships, weapons, and weapons. The main consumption of titanium in the military field is still concentrated in the aircraft. The earliest use of titanium in the United States was the F-86 fighter. It was later widely used on F-111, F-14, and F-15A fighters. With the upgrading of fighter planes, the requirements for speed and maneuverability have increased. The requirements for material properties of aircraft have become higher and higher, and the use of titanium materials has gradually increased. Titanium has also been used to build warships, new types of destroyers, and submarines; At the same time, titanium is also used to build ship propellers, engine parts, heat exchangers, condensers, coolers, bellows shrouds, and various fittings.

In addition, the potential for titanium for aeroengines is also large, and it is used in many key components such as blades and casings. With the increase in the total number of aircraft and aeroengines in service and the upgrading of aeroengines, the global aeroengine construction volume will increase from 2,890 units in 2013 to 3,900 units in 2018, with an annual growth rate of 6%. In military aircraft engines, because the service life of military aircraft engines is shorter than that of commercial aviation, the demand for titanium materials is not slowing down.

Military demand for civilian use has steadily increased Titanium prices have risen to favor titanium companies

Under the impetus of China's new-generation fighter aircraft development and equipment, it is expected that the compound annual growth rate of military demand for titanium will reach 12%. China has optimized and upgraded its air force equipment, accelerated the development and assembly of new generation fighters, large transport aircraft, and large-scale engines, accelerated the upgrading of the second and third generation aircraft, and will increase the annual demand for titanium steel for aerospace industry from 4,666 tons in 2013. More than 10,000 tons.

At the same time, civil aviation demand has grown steadily, international civil aviation orders have grown steadily, and aircraft delivery has increased at an annual rate of 7%. Coupled with the increase in the delivery of dual-aisle aircraft, the amount of titanium used for stand-alone aircraft has increased. The annual growth rate of international civil aviation titanium reaches 7.3%. In the same period, China vigorously promoted the development of large aircrafts and regional aircrafts and liberalized general aviation. It is expected that the demand for civil aviation titanium will increase to more than 1,400 tons.

In industrial demand, the demand for titanium in China's nuclear power, ocean engineering, and medical applications is still bright. It is expected that the annual demand for titanium for nuclear power will increase to 1050 tons, and the annual growth rates for marine engineering and medical titanium will be 8% and 9% respectively. .

The mid-to-long term bottom of titanium prices is now in place. The future depends on the release of demand and the digestion of production capacity and inventory. The price increase is not an overnight move. Constrained by the low demand, the price of sponge titanium is expected to reach 50,000 yuan by the end of this year. In the next 1-2 years, the price range of sponge titanium will range from 55,000 yuan to 55,000 yuan.

Titanium has many production processes and long cycle. Companies usually have large-scale inventory, and titanium prices have risen. The value of the company's inventory has increased. In addition, the product prices of high-end titanium materials are related to titanium prices, and the gross profit rate is relatively stable, and the titanium price has increased. Can improve corporate profitability.

Development Opportunity for Raising Localization Rate of Domestic High-end Titanium Material Demand

Compared with overseas titanium enterprises, there is still a gap between China's titanium industry in terms of technology accumulation, production equipment, and customer certification. A large number of titanium materials still need to rely on imports. For example, China Commercial Aircraft signed a C919 long-term forging supply contract with Russia. With the increase of investment in Chinese titanium and high-end equipment manufacturing, the gap in technology and equipment is narrowing. For example, in the forging process, Bao Titanium has tens of thousands of tons of free forging, and China’s double 80,000 tons of forging machine has also been put into production. . The improvement of the localization rate of high-end titanium materials is a general trend.

There are many titanium enterprises in China, but in terms of historical evolution, scale and technical level, titanium materials for military use

The enterprises with strong competitiveness on the field mainly include Baoji Steel, Baosteel Special Steel and Northwest Institute of Nonferrous Metals. I am the largest supplier of Ti titanium, especially the aviation industry, to Titanium, and western materials have also entered this market.

At present, the strength of technology and equipment of companies such as Baotie Co., Ltd. and Western Material Co., Ltd. are continuously improving, and a great deal of preparation and accumulation have been made for the release of market demand; and high-end titanium materials have very high technical and certification barriers, and the product has a higher gross profit rate. . The outbreak of demand for high-end titanium materials and the increase in the localization rate will create opportunities for the development of Bao Titanium and Western Materials.

Bao Titanium shares prominent advantages in integration

Bao Titanium is the largest titanium alloy and titanium producer in China. The company has formed an integrated production system from titanium sponge production to titanium. It has a production capacity of 10,000 tons of titanium sponge, 20,000 tons of titanium ingot, and more than 10,000 tons of titanium processing capacity. In 2013, the company achieved sales of 16,658.29 tons of titanium products, of which 8110.07 tons of titanium. Titanium's domestic market share is about 20%, and its market share in the aerospace and military industry is particularly high.

The company has an outstanding advantage in integration, with trial production of 10,000 tons of free-forging and titanium belt projects, and the enhancement of high-end technology and product advantages. The company complied with the global trend of integration of titanium enterprises. After acquiring Baozi Huashen, it obtained the advantages of integrated production of sponge titanium and titanium materials. The company's sponge titanium self-sufficiency rate is more than 50%, effectively reducing the impact of titanium sponge price fluctuations. At the same time, it also improved the stability and timeliness of the company’s titanium sponge raw material supply.

This also enabled Huashen Bao Titanium to remain profitable under the predicament of a loss-making industry in the titanium sponge industry, and it is thriving in the titanium sponge industry.

The Western Material Shareholders have a strong natural strength in the military market

The western material is controlled by the Northwest Institute of Nonferrous Metal Research, a well-known refractory material research institute in China. Xi'an Aerospace Science and Technology Corporation (a subsidiary of China Aerospace Science and Technology Corporation) is the second largest shareholder. The shareholders are strong and have natural strength in the military industry market. Advantage.

Titanium's western materials business is operated by Western Titanium. At present, the company has a titanium ingot smelting capacity of 8,000 tons and a titanium material processing capacity of 5,000 tons. The products are mainly pipes and plates. In 2013, the production and sales volume reached more than 3,800 tons. With the expansion of the company's titanium production capacity, the military industry market has gradually opened up to the market. The company’s titanium market for military use has continued to make progress. In 2013, the company set up a special working group to formulate plans for military aviation sheet development projects and promote market development. , R&D, production, technology, etc.

In addition to titanium, the company's business also involves the metal composite industry, metal filter material industry, rare and precious metal materials industry, refractory metal materials industry and rare equipment manufacturing industries and other business areas, and it has the largest metal composite materials in China and the world. The production line has the first domestic and second-largest metal filter material production line, and has the only domestic nuclear grade silver alloy control rod production line, and is an important supplier of metal materials for environmental protection, energy and other industries.