Boeing Suspends Buying Russian Titanium

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Courtesy of ZeroHedge View original post here.

Boeing Co.'s big bet on Russian titanium for manufacturing its commercial planes and military jets has come to a standstill since Russia invaded Ukraine, according to WSJ

The planemaker follows many other Western companies who are suspending operations in Russia. The turmoil could create future supply problems in the future for aircraft manufacturing. 

Since the invasion, Boeing has shuttered engineering offices in Moscow and Kyiv. The company declined to say what would happen with its joint venture with the country's top titanium supplier, controlled by President Vladimir Putin's former intelligence colleague, Sergey Chemezov.

About a third of Boeing's titanium is sourced from Russia, with the rest coming from the U.S., Japan, China, and Kazakhstan. 

"Our inventory and diversity of titanium sources provide sufficient supply for airplane production, and we will continue to take the right steps to ensure long-term continuity," said a Boeing spokeswoman. 

Boeing has spent decades developing partnerships in Russia since the Soviet Union's collapse in 1991. The company is heavily invested in Russia and Ukraine. 

Industry officials told WSJ that Boeing and other aerospace companies have panic hoarded titanium and been in talks with other suppliers for fear Russia would retaliate for Western sanctions

Boeing and other aerospace companies can still import Russian titanium under U.S. sanctions. But further turmoil in Ukraine and additional sanctions on Russia could risk Western businesses losing access to the precious metal that is strong, lightweight, and avoids corrosion. 

Brian O'Toole, a former Treasury official who crafted U.S. sanctions after Russia's 2014 Crimea invasion, warned any company "with a Russian supply chain has got a lot of problems on their hands—at least for the medium term." 

And maybe that's why Boeing CEO David Calhoun told investors in a January call that Boeing's titanium supply could be at risk. 

"As long as the geopolitical situation stays tame, no problem," Calhoun said. "If it doesn't, we're protected for quite a while, but not forever." 

And if Boeing were to experience sourcing issues of titanium, it could very well derail its plans to double 737 Max production by the end of 2023.

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