Safran boosts titanium stocks, shores up supply chain

By Tim Hepher

PARIS, Feb 24 (Reuters) - French jet engine maker Safran SAF.PA 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, although Russia's VSMPO-AVISMA VSMO.MM 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 GE.N co-owns the world's largest jet engine manufacturer by units sold, CFM International - is also looking to diversify its sources of the metal.

Separately, Boston-based General Electric said it is not concerned about titanium supplies as its current inventory levels are comfortable. The company is also counting on a diversified supply base to address any shortfall.

"We have a lot of diversity in our sourcing across metals, including titanium," a GE spokesperson said.

British engine maker Rolls-Royce RR.L 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 .


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 ERMT.PA , in a joint move with Airbus AIR.PA 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.
Reporting by Tim Hepher. Additional reporting by Rajesh Kumar Singh in Chicago and Paul Sandle in London. Editing by Sudip Kar-Gupta, Jane Merriman and Richard Pullin

Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.

All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.

Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.

We are using cookies to give you the best experience on our website. Read more or change your cookie settings.

Risk Warning: Your capital is at risk. Leveraged products may not be suitable for everyone. Please consider our Risk Disclosure.