Metal price swings a bogey for golf boffins

Business and golf are intrinsically linked. Both are about having a strong mental game and discipline is synonymous to each.

Golf can help people build key business acumen and oftentimes corporate relationships are built and deals brokered while out on the course.

However, avid golfers may want to consider buying that new driver pretty quickly as the prices for metals commonly used to make high-end gold clubs are forecast to swing higher in the short to medium term.

The projected prices of graphite, titanium, aluminium, and vanadium in particular could put a hole in the pocket of back nine boffins before putting their next ball for a possible birdie.

While this is a win for mining companies producing the raw materials, golf players in need of a new club may view it as an unplayable lie.

Mine shafts to golf shafts

Golf shafts play a critical role in the performance of a club. The material of the shaft can affect accuracy, distance, and feel of a shot. However, there are differences and benefits of having a club’s shaft made from metals other than steel.

A steel shaft golf club is far heavier than its graphite counterpart and will typically weigh in anywhere between 90 and 120 grams. Carbon graphite is one of the most lightweight materials out there and is commonly used to make woods. The material is usually combined with others to improve its durability and weight.

However, UBS forecasts that natural graphite will see a 50% upside to current pricing (circa US$570 per tonne) and has set its long-term graphite price at US$850/t. UBS also predicts natural graphite demand will rise by 6 times to 6.3 million tonnes by 2030, with a deficit forming from 2025.

Certain golf clubs are made using a blend of titanium, aluminium, and vanadium, which all could also see their prices increase in the short to medium term

Certain golf clubs are made using a blend of titanium, aluminium, and vanadium, which all could also see their prices increase in the short to medium term.

While titanium has a plethora of applications, golf club makers only caught on to its usefulness in the early 1990s. Golf clubs that use titanium have an excellent strength to weight ratio compared to their stainless steel counterparts – and they are also more durable.

In a driver head that reaches the top volume of 460 cubic centimetres, a manufacturer is likely to opt for 6/4 titanium – a blend of 90% titanium, 6% aluminium, and 4% vanadium. This is the most common alloy although there are others.

Some analysts forecast that titanium prices could reach pre-financial crisis levels to more than US$15/kg within the next few years. Titanium decreased by US$3/kg or 33.33% since the beginning of 2023, according to trading on a contract for difference (CFD) that tracks the benchmark market for this commodity.

Titanium is predominantly used in military and defence, internal engine components, missiles, consumer electronics, dental plants, and artificial joints. If substituted with titanium, products currently made with stainless steel would be equally as strong but 45% lighter.

It is generally a more expensive material and this is because it’s still processed and refined from ore to metal using the 80-year-old Kroll process. The commercial production of primary titanium metal is generally made either by Kroll or Hunter processes although the standard against which new technologies are compared is the Kroll process.

Kroll is a pyrometallurgical industrial process in which titanium dioxide is reacted with chlorine to form titanium tetrachloride, which is then reacted with magnesium to strip away the chlorine and leave behind the pure metal. Because the metal has multitudes of pores, it is called titanium ‘sponge’. The sponge is then cast into ingots.

Prices to tee off

Another important metal commonly used in making golf clubs is aluminium. Goldman Sachs expects aluminium prices will increase as inventory levels approach ‘very low levels’ in H2 2023 and into 2024, noting that the market is amidst a deficit.

Goldman Sachs predicts that LME aluminium prices will average US$4,500/mt in 2024 and US$5,000/mt in 2025.

According to cross-commodity price reporting agency Fastmarkets’ short-term aluminium forecast, the price of LME aluminium showed an upward trend in September, with an average monthly price of US$2,177, up from August’s $2,134.

Fastmarkets notes the aluminium market is experiencing a bullish sentiment and prices are on the rise. However, it says the sustainability of this bullish outlook remains uncertain as the market remains volatile and unpredictable.

Vanadium

Meanwhile, the vanadium market is well positioned for a significant potential value uplift with supportive long-term prices. Vanadium demand is poised to double by 2032, with more than 90% of this growth from Vanadium Redox Flow Batteries (VRFBs).

Prices for ferrovanadium – an alloy of iron and vanadium used in quality steelmaking – in 2022 rose rapidly, averaging just over double its average of 2021. The price of vanadium pentoxide flake 98% (V2O5) on 10 November 2023 was trading at about US$6.20/lb. After hitting US$12 per pound in February and March 2022, the price of V2O5 dipped to about US$7.50/lb in early November 2022.

Last year when Australian Vanadium (ASX:AVL) released the Bankable Feasibility Study (BFS) for its Australian Vanadium Project, the company had envisioned vanadium prices of US$10.50/lb, with an upside case of US$12/lb.

Vanadium steel alloys’ strength means they are perfectly suited to the creation of tools, axles, piston rods, and as girders in construction, as well as for golf clubs.

According to Out of Bounds Golf, 80% of the golf club market is controlled by less than 10 of the major companies.

Currently, there are close to 50 different golf club manufacturers in the golf market. The majority of these companies sell multiple different clubs but a few specialise in putters or wedges. The majority of these sell to the North American market but there are some that serve the Asian and European markets.

Write to Adam Orlando at Mining.com.au

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Written By Adam Orlando
Mining.com.au Editor-in-Chief Adam Orlando has more than 20 years’ experience in the media having held senior roles at various publications, including as Asia-Pacific Sector Head (Mining) at global newswire Acuris (formerly Mergermarket). Orlando has worked in newsrooms around the world including Hong Kong, Singapore, London, and Sydney.