Latest News

Safran boosts titanium stocks, shores up supply chain

© Reuters. FILE PHOTO: The logo of Safran is seen outside the company’s headquarters in Issy-les-Moulineaux near Paris, France, January 2, 2019. REUTERS/Gonzalo Fuentes

By Tim Hepher

PARIS (Reuters) -French jet engine maker Safran (PA:SAF) said on Thursday it had enough titanium reserves for several months after increasing stocks of the metal since the start of the year as Western aerospace companies brace for fallout from the Ukraine crisis.

Safran, which uses titanium to make landing gear for long-haul jetliners as well as some aero engine parts, depends on Russia for less than half its requirements, though Russia’s VSMPO-AVISMA (MM:VSMO) corporation remains its largest single supplier.

“We have been watching this situation for several weeks and have decided since the start of the year to increase our stocks of titanium especially through distributors in Germany,” Chief Executive Olivier Andries told reporters.

The French company – which together with General Electric (NYSE:GE) co-owns the world’s largest jet engine manufacturer by units sold, CFM International – is also looking to diversify its sources of the metal.

British engine maker Rolls-Royce (LON:RR) also said it was ramping up titanium supplies from outside Russia.

Western aerospace companies that rely heavily on long-term supply contracts with VSMPO-AVISMA have been increasing buffer stocks in case the metal is thrust into a potential trade war between Russia and the West, experts have said.

STRATEGIC SUPPLIER

Industry dependence on Russian supplies of the lightweight but strong metal adds a new strategic dimension to problems already clogging the global supply chain in the wake of the pandemic.

Safran’s boss spelled out the security implications of its decision to buy French supplier Aubert & Duval from mining firm Eramet, in a joint move with Airbus and investment firm Tikehau Ace Capital this week.

The superalloys group is the only Western supplier outside the United States capable of “elaborating” or developing new alloys needed to operate at ever-higher temperatures in an engine for a future Franco-German-led fighter, Andries said.

“For us it was fundamental to preserve these capabilities,” he said.

A&D also represents an alternative source of metal forgings which are currently in short supply. Output of the parts is dominated by companies in the United States where Andries said the aerospace industry’s supply chain pressures are “most acute”.

The A&D purchase does not mean Safran is shifting its overall strategy towards greater vertical integration in which manufacturers buy their own suppliers, but Safran stands ready to step in when strategic interests are at stake, Andries added.

Announcing 2021 results earlier, Safran said it did not exclude further bolt-on acquisitions.

Safran boosts titanium stocks, shores up supply chain

Disclaimer:Fusion Mediawould like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

What's your reaction?

Excited
0
Happy
0
In Love
0
Not Sure
0
Silly
0

You may also like

Leave a reply

Your email address will not be published. Required fields are marked *

More in:Latest News