30% Increase in the cost of Ti?

[Idris Icabod]

I read over on the Moots forum that the cost of Ti is to increase 30%. Can any of our more knowledgable friends on this board confirm that? Obviously this cost will trickle down to us and affect the length of time that we will all need to save up for our shiny new bikes.
The price hike of components has already delayed my new bike purchase, if this 30% rise is true, I may not be seeing this thing until 2035, when I will then want the rocket-powered hover Serotta.

[LegendRider]

If this is true, I think the ti bike makers will be in big trouble. Ti is increasingly hard to justify in the world of composites. 30% more for a Litespeed, Seven or Serotta would make the price just silly.

[Louis]

But what % of the frame's cost is the actual material? I bet it's not as much as you think. If that's the case, the price of the frame (or the bike) would hardly increase by 30%.

Louis

[dave thompson]

A 30% increase in the cost of materials would not make for a 30% increase in the total cost of a bike. Labor and overhead are a much larger percentage of the final cost of bikes.

[Ozz]

Current price - 38.90
Range - 38.16 to 39.56
12 month high - 40.50 (3-1-05)
12 month low - 14.35 (5-10-2004)

http://www.tradesignals.com/summary/TIE/Titanium%20Metals%20Corp

Of course, this is for the raw materials....I suspect that the manufacturing costs of the tubing dwarf the material cost. It would be interesting to see those numbers from the ti tubing companies

Maybe they are just laying the groudwork for a price increase?

Just like Starbucks, when there can be a drought, hurricane, etc in any country that grows beans and they declare a shortage and raise prices. Never mind that they never lower prices during boom years or that most the coffee affected is not the beans that they buy. OK, I am caffeinated now....

[LegendRider]

Regarding the cost of materials as a pecentage of the total bike cost, I agree with previous posters that the subsequent price increase won't be anywhere near 30%. My point, however, has more to do with the relative competitiveness of ti. In short, ti is fighting an uphill battle in my opinion and additional cost pressure hurts the ti bike players.

[Ozz]

yes, but look at the 12 month low...there is no reason to think the price won't drop back some....I have no idea about the "seasonality" of Ti, but maybe you can't mine the stuff in the winter so supply drops and price rises...do they mine the stuff in Siberia?

[Dekonick]

Nah; I'll bet Ti will always have a home. It has a nice ride quality and you can trash it (ride in the salt, etc...) with no problem other than for the components.

I dont know if the same is true for composites - perhaps they can take the same abuse... I dont know.

I still love the ride feel of a good Ti or steel frame (I know - I know - yes you can make anything ride whatever way you want...) - composite materials are obviously the future (after all most of the military planes now use em) but a Ti frame will always have a home with me.

:-)

[Richard]

The raw material cost is not really that important. It is the competition for the finished metal that creates the price increase at the bicycle level. The demands of the defense department (Iraq) are causing shrinking supply (price increases) for all other users. For instance, the extraordinary increase in the price of plywood (to $50 per sheet, I think) can be directly attributed to the defense departments demands shrinking the domestic supply.

[Kirk Pacenti]

With out getting all political.... The increase in the cost of Ti has some connection to the war in Iraq. When the defense industry demand goes up, so does the price. Mills would much rather sell the stuff to Uncle Sam by the ton at inflated prices than to lowly bike makers by the foot.

The real problem for most builders is lead time, something that also drives up the price (you have to buy more up front to ensure you have what you'll need later in the year).

At ABG, when we decided to go with integrated head tubes, we CNC machined the first run of Agilis HT's out of some really fat, thick walled tubes we had laying around. Once it was all gone, we tried to get more..... There was an 8 months lead time for that tube, and it cost $30.00+ a foot! Hence the cheesy bulge formed thin tubes w/ inserts now in use.

Having said all that, I think Ti bikes will be around for a VERY long time to come. After all, the stuff really is a great matereial to make bike frames out of...why, it must be at least the second best material of all time! ;)


Cheers,

[Ozz]

...why, it must be at least the second best material of all time! ;)

I thought you said you weren't going to get all political! You looking for a fight? :cool: ;) :beer: :beer: :beer:

[LegendRider]

I understand and appreciate the qualities of ti, but if I look around at the types of bikes my friends are buying - it's carbon, aluminum or a combination. All my friend's on ti have had their bikes for a while. Just an observation.

[Needs Help]

yes, but look at the 12 month low...there is no reason to think the price won't drop back some...
Jim Rogers, who started the Quantum Fund /w George Soros and retired shortly thereafter with all the money he made, and author of books like "Investment Biker" which chronicles his round the world trip on a motorcycle, believes we are at the start of a ten year bull market in commodities. He cites the ever increasing demand from China, and the fact that there haven't been any new discoveries of large ore deposits or oil reserves in the last 10 years. To wit, he started his own commodities fund, which tracks a commodities index he came up with, in order to make it easier for ordinary investors to invest in commodities, and he has a new book out describing his bullish stance on commodities.

Buy as many Legends as you can, now. They'll be more precious than diamonds.

[TmcDet]

I think that if you look you will find that steel prices have gone up just as much if not more than TI has over the last yr....this stuff is sold by the lb and a 30% increase in materials is nothing for a bike...lets see at 50 cents a lb the steel in a bike frame would cost oh what 10 bucks max? At the first of last yr steel was more like 14-20 cents a lb.

[Kirk Pacenti]

I think that if you look you will find that steel prices have gone up just as much if not more than TI has over the last yr....this stuff is sold by the lb and a 30% increase in materials is nothing for a bike...lets see at 50 cents a lb the steel in a bike frame would cost oh what 10 bucks max? At the first of last yr steel was more like 14-20 cents a lb.


This is all too true. Thanks to massive expansion in China and Korea, comodities are going through the roof! Last time I read about it, China is consuming more than 50% of the worlds steel and over 60% of the worlds concrete.... Not to mention the dollars slide down the dumper.

[1centaur]

Major steel companies have just accepted 71% increases in iron ore prices for the coming year - the complaining took about a day before the cave in. China's economy is growing at about 3x the rate of the U.S. economy (more vs. Europe) and needs to build a modern industrialized nation where a population the size of the ours (U.S.) already lives in cities and twice as many still live in rural areas. All the building blocks of this growth are needed in "mass quantities" while the rest of the world had slowed down enough that capacity was shrinking. Inflation's going to be coming at us on a lot of fronts, which will be especially jarring as a contrast to the deflation we enjoyed from a strong dollar and cheap Asian labor. Shimano parts were already in short supply due to aluminum demand in Asia.

China will be exporting more than the crudest steel by the end of the decade, however, and the factories they are building now will be the world's most modern and will not suffer from union rules, so if you can wait a few years bikes might actually get a lot less expensive.

This is the Chinese century - if they can stand it politically. Interesting times.