US titanium scrap-sponge ratio set to shift as melters chase margins

Titanium Scrap

The US titanium scrap-sponge ratio is poised to shift as melters chase cheaper inputs in 2026. Premium titanium sponge prices and weak downstream demand are squeezing margins and forcing producers to reconsider melt mixes. As a result, the US titanium scrap-sponge ratio could move decisively toward higher scrap utilization across many grades.

Furnace expansions support higher scrap utilization

Capacity expansions at ATI, Perryman and Timet will give melters more room to adjust the US titanium scrap-sponge ratio. Their projects are expected to add nearly 30,000 t/yr of ingot production capacity once fully ramped, according to Metalnomist estimates. Consequently, scrap utilization capacity could rise by 22pc to 111,215t in 2026 compared with 2024, ELG Utica Alloys’ Nick Corby told the International Titanium Association conference.

However, not every alloy can fully pivot away from sponge, because certain grades still require premium sponge for purity. Grade 5 (6Al-4V) ingot can be melted from 100pc scrap, which encourages a higher US titanium scrap-sponge ratio when prices favor recycled inputs. Importantly, melters can alter the scrap and sponge ratio without major downtime, allowing them to track raw material prices and supply conditions in real time.

Meanwhile, destocking in commercial aerospace could cap the practical impact of these technical options. Boeing and Airbus are signalling another year of subdued orders for ingot and milled products as they normalise inventory. This means melters already grappling with weaker demand may push deliveries out or no-quote dealers on certain grades, even as the US titanium scrap-sponge ratio tilts structurally toward scrap.

Global scrap flows deepen market distortions

Scrap sourcing dynamics will play a critical role in how far the US titanium scrap-sponge ratio can shift. The US accounts for around 95pc of global consumption of aerospace-grade titanium scrap, making it the natural sink for high-grade revert. Imports are crucial, covering more than half of US raw material needs and bridging gaps in domestic generation.

Historically, Europe supplied much of this scrap, reflecting its strong base of forging and machining operations. Long-standing supply agreements and buy-back schemes cemented a circular flow of titanium between the two regions. However, shifts in downstream processing toward Asia are eroding Europe’s share, even as titanium activity in countries like China accelerates.

China is on track to increase global titanium scrap exports by 64pc in 2025 to 5,874t, with most of that likely moving into the US. Officially, the US has only imported 434t of titanium scrap from China this year, US Commerce Department data show. Yet market participants say Chinese-origin scrap often reaches the US via other Asian countries to circumvent 25pc tariffs, complicating visibility.

As a result, the supply chain looks “inconsistent”, with scrap availability not matching lower generation rates caused by delayed aircraft build schedules and OEM stockpiles. Corby noted that imports are expected to exceed exports by 19,460t this year, the widest gap since records began. At the same time, European ferro-titanium consumers face weak steel demand and index-driven price pressure, cutting their appetite for scrap and pushing more material toward US buyers.

The Metalnomist Commentary

The evolving US titanium scrap-sponge ratio highlights how price signals, furnace investments and trade flows interact across the titanium ecosystem. For melters, flexibility in melt mixes is becoming a strategic hedge against stubborn sponge prices and volatile aerospace demand. For scrap generators and intermediaries, rising US dependence and opaque routing via Asia could keep differentials wide — and margins attractive — well into the next aerospace upcycle.