High-Purity Chromium Metal Supply Issues for Gas-Turbine Superalloys (1995) / Chapter Skim
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1 THE MARKETPLACE FOR CHROMIUM METAL
1 THE MARKETPLACE FOR CHROMIUM METAL
Pages 7-18
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From page 7... ...
Ultra-pure chromium metal is also used in the electronics industry, but this represents a relatively small quantity of material that is made in small specialty plants. The vacuum-melted superalloys, which are largely used in the domestic aerospace industry for the construction of aircraft engines described in Chapter 2, annually consume about 2,500 metric tons of the higher-grade, or high-punty, chromium metal, which is the subject of this report.
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From page 8... ...
estimates that world production is substantially less than its capacity, averaging only somewhat over 21,000 metric tons per year in recent years. Elkem Metals Company, located in Marietta, Ohio, is the sole producer of electrolytically manufactured chromium metal in the United States for aerospace applications and produces approximately 2,000 metric tons of highpurity chromium metal each year, in addition to lower-purity chromium metal and other high-purity materials.
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From page 9... ...
The Tosoh plant was recently dismantled as part of an urban renewal program, however, and no longer produces chromium metal. Russia possesses an additional 18,000 metric tons of capacity at two separate facilities, of which some 2,000 metric tons is electrolytically produced and suitable for aerospace applications.
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From page 10... ...
With net chromium-metal imports into the United States fluctuating between 2,000 and 6,000 metric tons during the 1982-1992 time period and with domestic production averaging about 2,000 metric tons, actual U.S. consumption is more likely to be approximately 6,000 metric tons per year, or about 30 percent of total world consumption.
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From page 11... ...
The Marketplace for Chromium Metal In 0 ID 0 cot `~ A, E ~.
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From page 12... ...
Closures Four chromium-metal producers have closed in Western Europe and North America over the past six years: Continental Alloys, S.A., in Luxembourg in 1989; Metal Alloys Limited in Britain in 1990; Shieldalloy Metallurgical Corporation in the United States also in 1990; and Murex Limited in Britain in 1992. Nippon Denko in Japan is also rumored to have reduced or ceased its production and has begun purchasing metal from China (Chegwidden 1993~.
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From page 13... ...
Military Spending In addition to allowing Russian producers to participate in the international chromium-metal marketplace for the first time, the end of the Cold War has led to a reduction in military spending in the United States and the former Soviet Union. This, in turn, has resulted in a drop in both the new orders for military aircraft and the demand for high-purity chromium metal.
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From page 14... ...
PROSPECTS FOR SHORTAGES On balance, the recent changes occurring in the supply and demand for chromium metal have resulted in excess capacity and depressed prices. As noted earlier, the recent annual production over the past several years of about 21,000 metric tons requires only 55 percent of the 38,300 metric tons of available world capacity.
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From page 15... ...
First, metal demand does not change much as price changes- that is, demand is price-inelastic- both because the substitution of alternative materials takes time and because metal prices typically account for only a small percentage of the total cost of the final product. Second, the construction of new metal capacity often requires several years and is not possible in the short run.
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From page 16... ...
under two capacity constraints and two short-run demand curves (DD and D'D')
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From page 17... ...
Also, trade friction with foreign countries could result in disruptions. For instance, trade friction with Russia over metals has resulted in several countries placing penalty duties on Russian materials, and the United States has repeatedly threatened China with trade sanctions over the past decade.
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From page 18... ...
It is also possible that such shortages will encourage chromium-metal consumers to employ alternative materials and to develop new technologies that reduce the need for chromium metal (i.e., that the long-run demand curve is more elastic than the short-run one depicted in Figure 1-3~. While these efforts may take time, they will eventually reduce demand and increase supply, thus causing the market price to fall and short-run capacity-constrained shortages to disappear.
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