T4 Market Intelligence

We tried to account for the newly identified industry data points and unusual crosscurrent of positive/negative comments provided by aerospace bellwether company executives and high-level industry contacts. Bottomline, we see incremental downside to near-term market expectations on headwinds associated with commercial aircraft delivery delays, supply chain instability/bottlenecks, and shortage of jet engines. Yet, longer-term market confidence seems to be building and the corporate outlooks are moving in the opposite direction, providing support to peak aerospace market bullishness. Continue reading

Maverick’s Call: We are hearing a lot of noise in the nickel-based alloys channel. Over the past few weeks, industry contacts: expressed new concerns about premium alloy supply shortages; have become even more frustrated with the domestic suppliers, notably PCP; and told us to brace for a crazy period of industry headlines and M&A. Our focus shifted to new PCP insights and confirmation of internal restructuring efforts. Continue reading

We expect minimal supply chain fallout following the production audible called by Airbus last week. Adjustments to the master schedule appear to be fairly modest, while more importantly, the management team is holding to its aggressive long-term single-aisle aircraft production strategy. We also believe lost A320 volume could be partially offset by upward movement in wide-body build rates given recently collected channel intel. Bottomline, the updated Airbus production forecasts account for: the conservative corporate guidance; details included in the aircraft program update; and other updates/commentary offered by aerospace industry bellwethers. Continue reading

Tower… Requesting permission to release Buzzing The Tower… A high-speed fly-by fully armed with research note summaries, select quotes from the channel, and review of industry headlines – all of which can be enjoyed with a morning coffee! Needless to say, the Tier4 Research team has been riding on Cloud-Mach-10 this month, feeling cool/confident following: the after the release of my blockbuster movie sequel (and future MTV Movie Award Nom); an unexpected fourth place Uno tournament finish for our underachieving group of interns (followed with a celebration dinner at Ponderosa), and completion of a solid month of survey work and market analysis. Continue reading

We are raising earnings forecasts for Boeing Company ahead of the quarterly report (scheduled for next Wednesday) following the better-than-expected commercial aircraft delivery report for June. Despite our relatively subdued 2H sales/margin outlook and limited 737 production visibility, we still anticipate continuation of the positive trading momentum and improving channel sentiment, following: a successful Farnborough Air Show, upbeat commentary provided by the management team, and the issuance of regulatory approval for the resumption of 787 aircraft deliveries. Continue reading

The June/July pricing signals have been mixed within the specialty materials space. Titanium mill and premium alloy product prices are still trending higher against the backdrop of downward commodity pressure, rising inventory levels, and conservatism tied to economic uncertainty. In this report, we raised the twelve-month price outlook for spot titanium ingot and sponge. Continue reading

The snapshot report is released bi-monthly, providing readers with quick looks at current trends within the global titanium market. Details include snippets/summaries on key events, survey data points and channel insights, and headlines that could directly/indirectly impact industry modeling assumptions. Continue reading

Recent channel intelligence involving the formal Boeing Company decision to sever ties with its Russian titanium supplier, VSMPO-Avisma, should be considered a positive development for the specialty materials group. Presumably, all three domestic producers will eventually become beneficiaries of redistributed of titanium mill supply contracts and associated forging services. Beyond the direct revenue benefit expected for Allegheny Technologies, Howmet Aerospace, and PCC-Timet, the eventual confirmation of this unexpected industry event could also serve as the next major spot market catalyst. Continue reading

There does not appear to be immediate alloy sourcing risk for The Boeing Company related to the changing Ukraine situation. While Russian supplier, VSMPO-Avisma, represents a large portion of the annual titanium requirement, our updated analysis suggests Boeing should be somewhat protected this year given the excess inventory on hand along with domestic melt availability. That said, we proactively lowered CY22 aircraft delivery and production forecasts today to reflect a six-month push-out of aerospace recovery assumptions, focusing on a less-certain macro environment, timing on Dreamliner recertification, and supply chain constraints. Continue reading

We are lowering The Boeing Company estimates ahead of the 4Q21 earnings release, scheduled for Wednesday, January 26, focusing on the downward bias to current BCA segment expectations. Upon final review monthly aircraft delivery reports, the recent commentary provided by airline industry executives, and feedback collected from the aerospace supply channel, we still see near-term earnings shortfall risk over the next 2-3 quarters and expect the executive management team to temper commercial aircraft delivery and/or production expectations for CY22. Continue reading

The lack of surprises offered Wednesday morning could be characterized as a net-positive for The Boeing Company and the global supply chain as the near-term demand, sales and earnings shortfall risk seems to be minimal while the longer-term view seems to be holding, if not improving. Outside of oft-discussed supply chain risk, headlines should start improving for the entire industry. Continue reading

Highlighting mixed-to-negative titanium survey reads and macro headlines over the past few weeks. At this point, our market intelligence and analysis indicate a slight downward bias to near-term earnings expectations for companies levered to titanium and other specialty alloys. Continue reading

Tower… Requesting permission to release Buzzing The Tower… A high-speed flyby fully armed with research note summaries, a sampling of interesting quotes collected from the channel, and industry headlines that can be enjoyed with a morning coffee. Admittedly, we deployed the initial review later than planned and Viper is incensed. We had a minor setback after getting caught in Iceman’s jet wash again, but that will never happen again-again. Going forward, we plan to release a new update near the start of every other weekend and then hop into some blue jeans for another beach volleyball match… Continue reading

The titanium snapshot report is compilation of unique channel insights, collected during our market checks and interactions with high-level industry executives, that emphasize new demand data points, spot market price trends, producer lead time management, and inventory management. There is so much great information worth sharing that we issue these reports bi-monthly (as part of the T4 Supplier Intelligence Service). Shifting to today’s update and supporting analysis, we saw a modest sequential improvement in the titanium survey reads but the global market still appears to be far from a period of real recovery. Industry contacts characterize the current environment as challenging or uncertain and still provide data points that suggest business conditions are trending in-line or slightly below expectations. There now appears to be an even lower level of probability that titanium will transition into a top-line tailwind for the individual companies at any point this year. Continue reading

Positive data points and contact commentary collected during quarterly checks on the specialty materials group serves as the key catalyst behind the upward estimate revisions we applied to certain names within our coverage universe. We are somewhat intrigued by an interesting setup developing around the upstream aerospace suppliers levered to premium alloy production (including nickel-based alloys) and/or jet engine demand. Continue reading

In this Flash Note, we provide an immediate reaction to the update commercial aircraft production schedule issued by the Airbus management team earlier today, including: modeling implications; the most impacted suppliers; and other bearish headlines that could soon follow. Continue reading

Ahead of the quarterly updates set to be released by several aerospace-levered companies over the next few weeks, and the swearing-in of President Joe Biden, we are submitting our Aerospace Flight Plan For 2021, broadly defined as an industry preview and data point refresher. The intention of this report is to provide a simple listing of industry headlines expected to materialize over the next twelve months that could sway investor sentiment or become a catalyst for estimate revisions on individual companies. We sat down over the weekend and updated our industry models to fully reflect our increasing conservative macro-outlook and to match some of the new data points provided by channel contacts. Continue reading