Russia-based VSMPO-AVISMA, the largest titanium producer in the world, has indicated that it may temporarily suspend its production operations in September this year, as it has been severely impacted by the coronavirus pandemic.
VSMPO-AVISMA is a key supplier of titanium products to the global aerospace industry, including Embraer, Airbus Group and Boeing, which in the current year has faced an unprecedented decline in air passenger demand due to widespread lockdowns and border closures and, in particular, the decline in air cargo demand amid the disruption of global manufacturing activity. Seeing a very large decline in orders, VSMPO-AVISMA is considering halting its titanium production in September this year unless some improvement in the business environment is observed. Besides the unfavorable market conditions in terms of demand from aircraft manufacturers, production costs also have an impact. “The suspension is an extreme step: however, operating at a low utilization rate is worse. We are going to suspend production in September, not in August as was initially planned. However, the final decision depends on how many orders we will actually receive by autumn,” Maxim Kuzyuk, CEO of VSMPO-AVISMA, said. Nevertheless, VSMPO-AVISMA is unlikely to lay off its workers except for a number of senior managers, the company said. The company is aiming to find orders in other segments such as shipbuilding.
In April this year, VSMPO-AVISMA reduced its commercial titanium production guidance for 2020 to 26,500 mt from the 39,000 mt planned earlier, as SteelOrbis reported previously. Meanwhile, the output of titanium sponge produced by VSMPO-AVISMA’s subsidiary AVISMA is expected to be 35,000 mt in the current year, instead of the previously planned 44,000 mt.