Demand for high-grade alloys used in aircraft-grade metals is unlikely to decline, according to nonferrous metals analysts. They point to cobalt as the benchmark, where prices, averaging just under $15/lb this year, will remain steady for the near future. Current transaction prices are less than the $24/lb average of 2004 but remain inflated beyond the consensus forecast of just under $14.

Airbus, a unit of Europe's EADS, recently disclosed a second six-month delay in the planned delivery of its A380 superjumbo commercial jetliner. A recent Reuters report says demand for cobalt-based alloys used in aircraft is unlikely to be damaged by delays to planned deliveries of the new Airbus.

"Airbus can't get enough material as it is, and that's despite the (delays to the) A380," says Bernard McMahon, managing director of Super Alloys International near London. "The A380 isn't even in full production yet, and while they've probably started sourcing metal for the A380, they still need metal for the other models they are producing."

And that doesn't even account for the large-scale purchasing of superalloys and other aerospace-grade metals by Boeing and its suppliers. Boeing says the delivery schedule for its new 787 Dreamliner remains unchanged. Boeing has spent time lining up a team of suppliers which are building about 60% of the plane's structure, so a ramp-up in 787 production should not overly stress the company's production lines for almost 400 other jetliners (mostly 737 and 747-8 models) already on order. The company's suppliers also are buying materials, including superalloys, for the C-17 cargo plane and the V22 Osprey tilt-rotor aircraft for the U.S. military and replacements for NATO's fleet of AWACS (Airborne Warning and Control System) jets.

The U.S. is one of the largest world consumers of this strategic metal but currently has no primary cobalt production. Development of a large mining complex in Idaho has been held up for some time by environmental reviews. World supply of refined cobalt rose more than 9% in 2004, but only by another 3% last year. "Still, the supply side of the industry has been able to keep pace with demand growth, at least through the end of 2005," says analyst Mothersole.

This year could be another story, though. Early indications are that refined production will slide slightly this year. Earlier forecasts suggested that cobalt production could surge in the next two years, led by reopening of dormant capacity in the Democratic Republic of the Congo region of Africa, but that now appears unlikely, according to Business in Africa Online.