How to Gain Titanium Market Exposure: Direct Stocks vs ETF Approach

Interested in capturing the titanium boom? The metal’s applications span from cutting-edge aerospace components to everyday consumer products like sunscreen and cosmetics. While titanium etf options exist for diversified exposure, understanding individual players reveals deeper opportunities for strategic investors.

Two Sides of the Titanium Story

Titanium’s growth narrative splits into two compelling tracks. First, aerospace and advanced manufacturing drive headlines—3D-printed engine parts, high-strength airframes, and next-gen propulsion systems. Second, and often overlooked, is the massive pigment market where over 90% of refined titanium becomes titanium dioxide, powering industries from construction paints to personal care products.

For investors, this dual-track approach creates multiple entry points beyond simply buying a titanium etf. Direct stock positions offer concentrated bets on specific growth catalysts.

The Aerospace & Advanced Manufacturing Play

Allegheny Technologies has quietly transformed itself into a specialty materials powerhouse. After shedding commodity steel operations, the company now derives 62% of revenues from high-performance segments, with 75% flowing from aerospace and defense contracts. Management guides for 10% segment growth with expanding double-digit margins ahead.

The real excitement? Additive manufacturing metal powders. Currently a niche revenue contributor, this business is accelerating rapidly. Allegheny already supplies 3D-printed fuel nozzles and stands to benefit enormously from next-generation airframe printing initiatives. The company’s tax-loss carryforwards should keep cash flow positive through the recovery phase.

Arconic presents a different angle. Born from the Alcoa split, it supplies critical aerospace components but faces a structural headwind: the industry’s pivot from aluminum toward titanium alloys could cannibalize portions of its traditional business. However, management is diversifying by growing in jet engine parts (up 9% year-over-year in early 2017) and landing-gear components. Like Allegheny, Arconic is ramping metal powder production for additive manufacturing applications.

Notably, Berkshire Hathaway’s $32 billion Precision Castparts acquisition silently positioned the conglomerate as a major titanium alloy player. While this validates market significance, the conglomerate’s size makes it difficult for direct titanium exposure—a titanium etf might offer cleaner concentration.

The Pigment & Chemical Exposure

Here’s where volume truly matters. Titanium dioxide production dwarfs aerospace applications, and rising prices since 2016 have lifted producer valuations significantly.

Chemours dominates with 1.25 million metric tons of annual capacity (22% of global supply) serving 800+ customers. The titanium segment alone drove 31% of 2016 sales and over half of adjusted EBITDA. With capacity additions coming from a Mexican expansion in the next several years, growth should accelerate further.

Huntsman Corporation operates approximately 782,000 metric tons of capacity using both major production processes. This flexibility theoretically serves diverse customer needs, yet the company hasn’t captured as much upside from rising titanium dioxide prices as Chemours. The pigment segment generated $2.1 billion revenue with $130 million adjusted EBITDA last year—impressive but growing slower than peers. Huntsman’s core polyurethane business remains the priority.

Kronos Worldwide is the pure-play bet: titanium dioxide is its only product, with 555,000 metric tons capacity. Sales peaked in 2012 then declined, but the 2017 inflection is encouraging—first quarter revenues up 16% year-over-year with declining unit costs. While smallest by revenue, Kronos offers the highest dividend yield, though sustainability depends on sustained price recovery.

Why Individual Stocks Beat the ETF Approach (Sometimes)

A titanium etf provides convenient diversification, but individual securities allow you to thesis-bet on specific tailwinds. Allegheny and Arconic let you ride additive manufacturing adoption. Chemours and Kronos give you direct exposure to pigment pricing cycles. Huntsman sits in between.

The pigment producers offer more immediate cash-generation potential given their scale and current pricing environment. The aerospace-focused plays promise longer-term compounding if 3D printing adoption accelerates as expected.

The Bottom Line

Don’t confuse titanium’s diverse applications with complexity. The material’s fundamental drivers are straightforward: aerospace builds higher-performance aircraft, and chemical makers benefit from pricing power in massive pigment markets. Whether you choose a titanium etf for simplicity or cherry-pick individual stocks for conviction, the core thesis remains unchanged—this metal’s importance will only grow.