Not only are all sectors of the aerospace industry strong—including large commercial jets, regional jets, business jets, very light jets and defense aircraft—but they are all strong at the same time. This is highly unusual, say the experts, and highly fortuitous for suppliers of aluminum, titanium and other aerospace alloys.

“We haven’t experienced an overlap of commercial and military cycles, at least to this extent, for 10 to 15 years,” says Rod Hogan, manager of procurement for Lockheed Martin Aeronautics, Fort Worth, Texas. The market’s strength “looks like it has some legs,” adds Bill Sales, senior vice president for nonferrous operations at Reliance Steel & Aluminum Co., Los Angeles.

Due to this high-flying demand, aerospace metals—particularly titanium and certain grades of heat-treated aluminum plate—are in very tight supply. Most major mills report that they are in the process of bringing on new capacity, which should begin to ease the supply shortfall next year. With several new commercial aircraft models expected to roll out in the next few years, however, that added capacity may bring only limited relief to metal availability.

Commercial aerospace, by far the largest of all the aerospace sectors, is absolutely booming worldwide, with both Boeing and Airbus receiving more than 1,000 orders each last year, says David Napier, director of the aerospace research center at the Aerospace Industries Association of America in Arlington, Va. “They haven’t had orders of that magnitude since the boom in 1998-99.”

While airlines have placed about half as many orders for new planes this year, vs. 2005, 2006 will be another good year by historical standards, says consultant Richard Aboulafia, vice president of the Teal Group, Fairfax, In the first nine months of 2006, total net orders of large civil jet transport aircraft totaled 962 planes, according to AIA figures, bringing the order backlog to a very healthy 4,242 planes, up from 3,977 planes at the end of 2005.

“Airline passenger traffic has finally recovered from the decline that the Sept. 11 terrorist attacks created, as well as the economic slowdown that followed that attack,” Napier says. “Now the economy is growing, and people are flying more.”

Another factor boosting demand is air carriers’ desire to replace aging commercial fleets with more efficient aircraft. Indeed, Napier says, high fuel prices have actually spurred some new orders. He admits that sounds counterintuitive, as the already ailing airlines struggle to pay for fuel, “but it also provides a push for them to buy new, more fuel-efficient equipment.”

Economic strength around the globe is helping to offset weakness in the U.S. aerospace industry, says Aboulafia. “Globally the airline industry is losing about $1 billion a year, with U.S. airlines losing about $4 billion, which indicates that much of the strength in the supply of planes to carriers is coming from other countries.”

The future of the commercial aerospace industry looks bright for some time. “Worldwide the airlines plan to more than double their fleets in the next 20 years, with air travel growing by 4.9 percent a year, including 3.6 percent a year in the United States and 8.8 percent in China,” says Bob Mraz, vice president of sales and marketing for TW Metals Inc., Exton, Pa.

The sector will likely strengthen as the decade goes on, says L. Patrick Hassey, chairman, president and chief executive officer for Allegheny Technologies Inc. in Pittsburgh. “While we have heavy demand today for existing airplane programs that are currently under way, step-up demand for the aerospace industry hasn’t yet begun.”

Projects in the works include such prototype models as Boeing’s 787 Dreamliner, a reworked version of Boeing’s 737, the Airbus superjumbo A380 and Airbus A350 XWB. (The XWB is a newly introduced A350 that was reconfigured to compete head to head with the Boeing 787). “This will result in a big step-up of aircraft starting in 2008, with production possibly ramping up to higher levels in 2009-11,” Hassey says.

Metal suppliers will feel the effects of that buildup as much as 12 to 14 months ahead of the rollout dates. All wide body planes, the A380 (by far the largest), the A350 XWB and Boeing 787 will consume a lot of metal, says Chris Boland, director of marketing for Dallas-based Titanium Metals Corp.

The journey from drawing board to assembly line has not been a smooth one for the A380. Production of the aircraft has been delayed three times in the past 16 months, causing some large airlines to consider canceling their orders (though none had done so as of press time). The delays resulted in a cost overrun of nearly 5 billion euros ($6.3 billion U.S.), prompting a major restructuring of EADS, Airbus’s Franco-German parent. The giant 555-passenger aircraft was originally supposed to roll out early this year, but now the first plane won’t be delivered until October 2007, with 13 more scheduled for delivery in 2008 and 25 in 2009. Full production of 45 planes per year won’t be achieved until 2010.

In addition, some industry observers question whether the jumbo jet concept (an aircraft so big that it can only fly from one major airport hub to another) is the way to go. The concept itself may limit orders of the A380. According to Napier, as of June, the A380 had received 159 orders, while the smaller 250-seat, twin-aisle 787 had received 360 orders—the most successful aircraft launch in history. The first 787 is scheduled for delivery in 2008.

Airbus originally projected that it would need to sell 250 A380s just to break even. Now given all the production delays and cost overruns, the company admits the breakeven point has climbed, though they won’t say how much higher.

The problem is that very large planes like the A380 have a limited market—only 5 to 10 percent of total commercial flights. “The name of the game is frequency,” Aboulafia says. “That means flying smaller long-range aircraft like the 787 and the A350,” which could be used to satisfy about 50 percent of market demand. “If it comes down to building the A350 or A380,” he adds, “Airbus should kill the A380.”

Airbus production delays could create a flow of extra material back onto the market that will reduce lead times and put pressure on aluminum margins,” says Richard J. Greaves, president and chief operating officer of ThyssenKrupp Materials NA Inc. in Detroit. However, Kevin Lowrey, spokesperson for Pittsburgh-based Alcoa Inc., predicts the impact will be minimal. “This is just one platform among all the planes that Airbus produces that might be delayed. Demand overall continues to be very strong.”

The same goes for defense aerospace, says Aboulafia. “The U.S. military fleet is in bad shape and needs recapitalization. Whether that means spending on new aircraft or repairing the fleet, there is a lot of business.”

The Department of Defense’s war readiness has brought a sense or urgency to its push to replace aging equipment with new technology. As always, there is give and take in military-related demand as mature programs ramp down and new ones ramp up, observes Linda Zimmerman, director of procurement for Lockheed Martin.

The F-16 fighter, which has been in production since 1978, has the potential for more international sales before it completes production in 2011 or 2012, just in time for production of the F-35 Joint Strike Fighter to gear up, she says.

Meanwhile, demand for Lockheed Martin’s F-22 continues to be strong. The company is currently under contract to build 183 F22s, with the U.S. Air Force expressing desire to order more, says Norman Robbins, a company spokesperson. He also notes that Lockheed Martin is now producing the upgraded J model of its C-130 transport plane, as well as modernizing its C-5 and Stealth Fighter. “There is a lot of development activity going on.”

The end result is that demand should remain steady at this high level of activity for at least the next few years. “I don’t think that we will see the real cyclical production pattern that we have seen in the past,” Robbins says, which promises continued demand for aerospace metals.

Production of regional jets has been going like gangbusters for the last five to 10 years, but is now reaching a saturation point, says Napier. “Part of that is because of the shakeup in the U.S. airline industry. The regional airlines used to be partnered with the mainline airlines, serving the hub and spoke system, but with the bankruptcy of several major airlines, the regionals now need to survive on their own.”

At the same time, the smaller general aviation sector, including business jets and the emerging very light jet (VLJ) sector, is doing quite well. Katie Pribyl, spokesperson for the Washington, D.C.-based General Aviation Manufacturers Association, says the industry set a record for billings last year, up 27 percent to $15.1 billion. In the first half of 2006, billings reached $8.8 billion, a new half-year record. Pribyl attributes this strong demand to companies recognizing the benefit of aircraft as a business tool. “They are realizing how cost effective business jets are vs. flying on commercial airlines.”

The emergence of the VLJ market most likely will further bolster demand in the future, though gradually. “The idea of an air taxi is a new, unexplored area,” she says, admitting that the concept hasn’t proven itself yet. Eclipse Aviation Corp., Albuquerque, N.M., which was formed to exploit this market segment, recently saw its Eclipse 500 certified, which joins the Cessna Citation Mustang certified earlier. According to Greaves, Eclipse has already received over 2,000 orders and is forecast to produce one aircraft per day in the near term.

With so much production activity among aircraft manufacturers, metals suppliers are challenged to meet customers’ needs. Mill and service center executives report that supplies of titanium and 2000- and 7000-series heat-treated aluminum plate are quite tight, with many products on allocation or controlled order entry.

Availability of titanium has been so tight and pricing so high that aircraft designers may begin seeking cheaper substitutions. (The price of titanium 6Al-4V ingot was $27.58 per pound in June 2006, up 36 percent from a year earlier.) John Byrne, Boeing’s director of purchased outside production and common commodities, said at a recent Inter-national Titanium Association meeting that if pricing and availability don’t come under control soon, Boeing may try to engineer some titanium out of their planes.

Still, the outlook for titanium demand remains positive. Titanium is more compatible with composites than aluminum, explains Boland of Titanium Metals Corp. “Titanium, unlike aluminum, does not corrode when pared with composites, and it also has a very similar coefficient of expansion.”

Of the currently produced commercial aircraft, the Boeing 777 contains the most titanium—139,000 pounds fly weight. By contrast, the A380 will use 150,000 pounds of titanium per aircraft and the Boeing 787 (which will be about 50 percent composite) will use about 250,000 pounds per plane, says Jeff Wise, vice president of sales and marketing for Titanium Industries Inc., Rockaway, N.J.

Designers of military planes have made a major move toward composites and away from aluminum, and not just for weight savings, notes Scott Hundemer, senior manager of procurement for Lockheed Martin. For defense applications, composites and titanium have stealth advantages over aluminum.

General aviation aircraft also have been moving toward a higher percentage of composites. “Airframers are looking for lighter materials that will deliver strength and be damage resistant,” says C. Michael Zundel, executive vice president, commercial, for Transtar Metals, Torrance, Calif. “If those needs could be met with aluminum alloys, there wouldn’t be such a rush to composites. Several mills are currently developing new alloys to meet the needs of the airframe manufacturers,” he adds.

Alcoa’s Lowrey plays down the impact of composites on aerospace aluminum demand. He points to Boeing’s 787, which incorporates far less composite material than when it first hit the drawing board. “It has the fourth largest aluminum content of any airplane in Boeing’s fleet. That’s a lot of aluminum. If we have to lose, that’s the way to lose. We see it as a victory.”

Meanwhile, aerospace-grade aluminum plate supplies remain tight. “We can’t satisfy all the demand that we have, and we are scrambling to get 2000- and 7000-series plate,” says Transtar’s Zundel. Options available to service centers and their aerospace customers are quite limited, he notes, as relatively few mills produce product that conforms to the requirements of airframe manufacturers.

“As we are allocated from our mills, we have to allocate to our customer base,” says Sales at Reliance. “We’ve been very selective about the business we have taken on. In some cases, we have missed opportunities because we didn’t have availability.”

Titanium buyers are facing similar, or even more extreme, constraints. “We have begged and pleaded to get as much as we can for our allocation, but we have not able to get enough,” says Brian Misak, vice president of sales and marketing for Western Titanium Inc. in San Diego.

Despite this, he continues to work with the same sources. “Some of our competitors have purchased Chinese material. But on the aerospace side, especially for military aerospace, we need to buy only from sources that are compliant with the Berry Amendment, which means we can only buy from the United States or certain West European suppliers.”

Both titanium and aluminum producers are making moves to increase capacity. On the titanium side, ATI is in the midst of a three-phase program to restart and expand the capabilities of its titanium sponge facility in Albany, Ore. The company also plans to build a greenfield sponge facility capable of producing 24 million pounds per year of titanium sponge in Raleigh, Utah. The new facility is expected to be in full operation by 2009.

Timet is expanding its Henderson, Nev., vacuum distillation process sponge facility, which is expected to increase its sponge producing capacity by 47 percent. Timet is also adding an electron beam cold hearth melt furnace at its Morgantown, Pa., facility to increase its cold hearth melting capacity by about 54 percent. Likewise, RTI International Metals Inc., Niles, Ohio, is expanding its titanium melting, forging and conditioning capabilities.

On the aluminum side, Alcoa is continuing a project announced last year to increase its heat-treated plate production capacity by 50 percent—some of which has already come on-stream.

Kaiser is in the midst of two expansion programs at its Trentwood, Wash., rolling mill that will double its heat-treated plate capacity there. Similarly, Alcan Inc., Montreal, is upping its plate producing capacity in Ravenswood, W.Va.

Nevertheless, the increase in aerospace metals demand is expected to outstrip these capacity additions, and supplies could be even tighter in 2007.

“A number of mills have forecast that it will stay extremely tight at least through 2010-11,” says Sales, “but I am comfortable saying it will remain strong at least through 2007-08.”