Adam CogginsAnalyst, Roskill

TITANIUM USA 2019, Mobile, AL

25th September, 2019

Titanium Metal – global supply and demand trends overview

Disclaimer

The statements in this presentation represent the considered views of Roskill Information Services Ltd. It includes

certain statements that may be deemed "forward-looking statements“. All statements in this presentation, other

than statements of historical facts, that address future market developments, government actions and events, are

forward-looking statements. Although Roskill Information Services Ltd. believes the outcomes expressed in such

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contained herein. Accordingly, the statements in the presentation should be used for general guidance only.

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Presentation outline

• Titanium supply trends

• Production and trade along the supply chain

• Sponge

• Scrap

• Melted products

• Mill products

• Overview of consumption

• Titanium outlook

• Main markets

• Aerospace

• Industrial

• Other areas of potential growth

Titanium supply trends

Titanium sponge

Source: Roskill

Titanium sponge production, 1999-2018 (kt)

Titanium sponge

Source: GTT, Roskill

Major sponge trade flows:

• Japan → N. America • Russia → EU 28• Kazakhstan → China• Ukraine → China and

Russia

• Sponge trade highlights the small number of regional production hubs for sponge and melted products

Titanium sponge trade matrix, 2018 (46kt)

Titanium Scrap

Source: USGS, Roskill

• Scrap estimated to account for ~60% of US melted feedstock • USA consumes the majority of scrap used in remelting globally

USA: consumption of scrap by application, 2000-2018 (kt Ti)

Titanium Scrap

Source: GTT, Roskill

Titanium waste & scrap exports by main regions, 2015-2019E (kt)

Titanium waste & scrap imports by main regions, 2015-2019E (kt)

• Scrap trade has been increasing and is on track to grow further in 2019 • EU countries are major exporters of scrap and also account for significant imports, along with the USA• China reports very little scrap trade

Melted products

Source: Roskill

Titanium melted product capacity by technology, 2019 (ktpy)

• US capacity includes high amount of EBM and PAM, suitable for remelting scrap • Chinese melting capacity mainly via VAR• Capacity includes some double- and triple-melting, so actual ‘available’ capacity is much lower

Melted products

Source: GTT, Roskill

Titanium melted products trade matrix, 2017 (17kt)

• Trade shows the flow of feedstock to mill product manufacturers, based primarily in aerospace production hubs

Major ingot & slab trade flows:

• USA → France• USA → UK • Russia → USA

Mill products

Source: Roskill, GTT

Titanium mill product output, 2018 (%) Titanium mill product trade, 2009-2019E (kt)

• Mill product output increased significantly in both 2017 and 2018• This is reflected in increased trade volumes – global mill product trade is expected to remain at similarly high

levels in 2019

Mill products

Source: GTT, Roskill

• Mill product exports are sent to a wider range of countries than sponge and melted products exports

Mill product trade matrix, 2018 (104kt)

Major US mill product shipment destinations:

• UK – 18%• Japan – 13%• France – 12%• Germany – 9%• Mexico – 8%• Canada – 7%• Italy – 5%

Major Chinese mill product shipment destinations:

• Taiwan – 14%• USA – 11%• South Korea – 7%• UK – 6%• Germany – 6%• India – 5%• Indonesia – 5%

Mill products

Source: GTT, Roskill

• Mill product exports are sent to a wider range of countries than sponge and melted products exports

Mill product trade matrix, 2018 (relative value)

Major US mill product shipment destinations:

• UK – 18%• Japan – 13%• France – 12%• Germany – 9%• Mexico – 8%• Canada – 7%• Italy – 5%

Major Chinese mill product shipment destinations:

• Taiwan – 14%• USA – 11%• South Korea – 7%• UK – 6%• Germany – 6%• India – 5%• Indonesia – 5%

Mill products consumption

Source: Roskill

Note: Apparent consumption = production + imports – exports: changes in stocks are not accounted for.

Mill products apparent consumption, 2018 (%) Estimated mill products demand, 2018 (%)

• Apparent consumption of mill products has increased over the previous 5 years – largely due to aerospace growth

Titanium outlook

Mill products outlook: Aerospace

Source: Boeing Commercial Market Outlook, 2019-2038

• Demand for air travel is anticipated to grow strongly over the next 20 years, led by the Asia Pacific region

Boeing: World forecast traffic by region (Bn RPKs)

Note: RPKs = Revenue Passenger Kilometres; Within Asia Pacific excludes travel within China

Mill products outlook: Aerospace

• Roskill anticipates titanium demand in commercial aerospace to grow strongly in the near-to-medium term• Longer term trends are more uncertain – the aerospace industry has been historically cyclical• Existing aircraft orders (Airline Monitor) should support aircraft production rates to the mid-2020s

Boeing AirbusRegional jets and others

5,951 7,097 2,564

Order backlog as of end 2018:

Outlook for titanium use in aerospace, on “business as usual” and “AM-adjusted” basis (kt)

Source: Roskill

Mill products outlook: Industrial

• Main drivers for industrial demand are the chemical and power generation sectors • Chlorine generation and purified terephthalic acid (PTA) – China dominates• Main trends in power generation are increasing energy demand and move toward renewable technologies

Demand drivers

Uncertainties/threats

Chemical sector: Power generation:

Uncertainties/threats

Demand drivers

• Chlorine production• PET/polyester demand

• Increasing global energy demand• Nuclear power

• Kerbing of emissions – reducing coal demand

• Basic chemical industry growth and overall performance of global economy

Source: Roskill

Mill products outlook: Other uses

• Roskill expects strong growth in medical and high technology markets• Moderate growth is also expected in various other consumer markets

Medical

• Population growth• Ageing populations• Rising incomes• Sedentary lifestyles• Degenerative joint

problems

High-tech

• Semiconductor industry growth (sputtering targets)

• Demand for MRI scanners (super conducting wire)

Consumer

• Golf – limited growth in mature markets

• Golf – potential in developing markets

• Bicycles – competition from other materials

• High cost limits use to luxury items

• Potential for AM to make titanium more accessible

Source: Roskill

Summary

• Titanium demand growth expected from main end uses

• Particularly in the near to medium term

• Capacity for industrial-grade material thought to be adequate – high latent sponge/melting/mill capacity in China

• Tightness in aerospace-grade supply could result if demand remains strong

• High sponge capacity utilisation – expect to see continued increase in scrap use

• Ramp-up of aircraft production could lead to mill product bottle-necks

• Increases in sponge prices could lead to substitutions in some industrial applications

New Titanium Metal report published August 2019:

1. Executive Summary2. Titanium Flowchart3. Titanium Supply Chain4. International Trade5. Prices6. Outlook7. Background8. Country Profiles9. End-uses10.Company Profiles

Jessica RobertsManager – Battery & Technology Materialsjessica@roskill.com+44 (0)208 417 0087

Adam CogginsAnalyst – Roskill adam@roskill.com+44 (0)208 417 0087