PROGNOSIS IS POSITIVE FOR HIGH-VALUE METAL MAKERS

Health care is a booming industry, and an aging baby-boomer population stands to give the industry – and the metal producers that supply it – a lot more zip.

As the aging population starts to collect social security, there is an increased need for medical devices that will enhance and prolong life, including new hips, knees, bone screws and stents, along with the surgical instruments and other devices used by doctors.

"If there is a bright spot in health care, it is more utilization," Alan H. McCoy, vice president of government and public relations at AK Steel Corp. (West Chester, OH), said of the improving future for stainless and specialty metals in the medical market. "In terms of market served, it seems likely that the market will grow as baby boomers age."

The 300-series stainless steels are the most popular for use in medical applications due to their high resistance to corrosion. Types 304 and 316 are the most common, and are the first types to be used for implants. Coated steels also are used by the medical industry. AK Steel's AK Coating Inc. subsidiary, for example, produces a coated product known as AgION, antimicrobial steel used in medical equipment. The coating, which uses silver as an active ingredient, is designed to inhibit the growth of bacteria, molds, fungi and other microbes. The silver ions are slowly released from the inorganic antimicrobial compound to the surface of the treated steel.

Likewise, the business of making titanium, nickel-cobalt alloys, zirconium and columbium for various implants, like hips and knees, as well as medical equipment and surgical tools has been very good, said Dan Greenfield, director of investor relations at Allegheny Technologies Inc. (ATI; Pittsburgh, PA). Metallurgists at ATI focus on enhancing current medical applications and developing new ones, Greenfield said. "They are looking at refining new alloys and making new alloys and working with customers," he said, although he declined to detail specific projects currently under way.

David G. Pudelsky, vice president of sales and market development at RathGibson Inc. (Janesville, WI), a manufacturer of precision-engineered pipe and tubing, said the opportunities aren't just with baby boomers in North America. "The growth rates in emerging markets internationally we suspect will exceed what's going on in North America," he said. RathGibson reviews a number of medical and high-purity bio-pharmaceutical publications and conducts targeted promotions in both the United States and globally.

"We look at publications in India to run advertisements or press releases talking about our capabilities for that market," Pudelsky said, adding that an expanded middle class in Asia is seeking out medical procedures previously not attainable. To make further progress in emerging markets, RathGibson opened an office in China two years ago and offices in Bahrain and South Korea in 2007, and the company is exploring opportunities for additional offices in Asia and Europe.

The medical industry doesn't account for a large tonnage of overall sales, the producers said, but it's a good market since most of the metals that go into medical devices are high-value. "It's a small but steady business,? AK Steel's McCoy said. "Any ups and downs typically track new product introduction, which are fairly far apart – three- to five-year cycles." Although prices for the corrosion-resistant materials used in medical applications have gone up dramatically during the past few years, Pudelsky said there hasn't been much resistance from customers. "I'm not saying people don't shop around, but there aren't that many options. They're not looking to downgrade the material to save a few cents. It's more critical to have the proper material for the proper application."

Source: American Metal Market, as reported by the National Tooling & Machining Association.