Osaka Titanium Technologies to Delay Sponge Expansion for 2 years

Osaka Titanium Technologies announced on Wednesday the firm delays part of the sponge titanium expansion plan under slower demand from 32,000 tonnes after expansion in October 2008. The firm delays the plan for 2 years both for the second phase, which was planned to launch annual 6,000 tonnes of output capacity in July 2009, and the third phase, which was planned to start 3,000 tonnes of capacity in October 2009.

World titanium market is in inventory adjustment when financial crisis impacts on the industrial activity while the supply was tight before. Boeing’s delay for the delivery of new model of B787 also reduces the demand.

The firm decided the delay at board meeting on Wednesday. The firm will launch the second phase in July 2011 and the third phase in October 2011 expanding the annual output capacity to 38,000 tonnes and 41,000 tonnes in each phase.

The firm keeps the expansion plan to launch new titanium melting plant with 3,000 tonnes of annual output capacity in July 2009 and new the polycrystalline silicon plant with 2,200 tonnes of output capacity in April 2011 in Kishiwada, Osaka.

The firm operates the plants at 70% of the capacity with slower sales in January-March. The firm revised the full year outlook downward to 14 billion yen of recurring profit for the year ending March 2009 from former 17 billion yen. The operating profit is 14.6 billion yen and the net profit is 8.16 billion yen with 52 billion yen of sales while the firm expected 17.2 billion yen of operating profit, 9.96 billion yen of net profit and 57 billion yen of sales before. Higher yen rate also impacts on the results along with the slower market.