Deep|ATI: The Materials Chokepoint of the Starship Era; Superalloy Content Per Vehicle Is 25-30x a Falcon 9
Summary
ATI is framed as the public-market chokepoint for Starship-era superalloy demand: ~39 Raptors per stack at 800kg-1t each imply 30-40t of superalloy, or 25-30x a Falcon 9. Space demand could reach ~900-1,100t/yr by 2028 and 2,300-2,900t/yr by 2030, while tight VIM capacity and 10-12-year LTAs drive repricing. Despite this, ATI trades at 31.9x trailing EV/EBITDA versus CRS 38.4x and HWM 43.3x, suggesting re-rating upside.
Investment Highlights
The generational turnover in rocket engines is driving a ~25-30x step-change in superalloy content per launch vehicle - one Starship stack carries roughly as much superalloy as 25-30 Falcon 9s combined.
1. Core thesis: a structural step-change in space demand. A full Starship stack carries ~39 Raptor engines (~33 on the Super Heavy booster plus 6 on the ship). Each Raptor consumes 800kg-1t of nickel superalloy, 7-8x the prior-generation Merlin (~125kg), putting superalloy content per stack at roughly 30-40 tonnes, or 25-30x a Falcon 9. The step-change is dictated by the physics of full-flow staged combustion on methane; BE-4 and Archimedes are converging on the same architecture, making the trend industry-wide and irreversible. Layering in refurbishment of turbine wheels, seals, and thrust chambers every ~10 flights under the reuse economy, we see space superalloy demand of roughly 900-1,100 t/yr by 2028 and 2,300-2,900 t/yr by 2030 (with a conservative floor scenario, excluding refurbishment, of ~480t in 2028; see Section 4).
2. The materials layer is one of the few structural entry points through which public-market investors can express this step-change. SpaceX’s vertical integration has swallowed nearly every link in the rocket value chain; specialty melting is the lone exception, protected by a time-based barrier that capital cannot compress. SpaceX still outsources melt production of its proprietary SX alloys to an external mill under an NDA, and its revealed preference has been to sign a 10-year supply agreement with Korea’s Spear rather than build captive capacity. As volumes ramp, the incremental materials demand must spill over to incumbent mills - and rockets share the same mills and the same specification system as commercial aerospace. ATI is the largest, most full-line listed name in that layer (see “Origin of This Report”).
3. The market prices ATI as a commercial-aero cyclical; we believe it is a structural asset occupying the deepest-moat link in the aerospace materials chain. ATI sits in the specialty alloy melting layer (L2): the nickel round-billet market is ~90% held by ATI, Carpenter, and PCC (the industry’s “Big Three,” with broadly similar shares), and ATI is #1 in nickel plate. At the very top end, only 2-3 US mills can supply rotating-grade melt, and a greenfield entrant needs 7-10 years to reach qualified delivery. As of the July 10, 2026 close (S&P Global MI data), ATI trades at 31.9x trailing EV/EBITDA (~26x on FY26 guidance) - the cheapest of the three listed specialty melt/casting leaders on every valuation metric: Howmet 43.3x and Carpenter 38.4x on same-day trailing figures, with forward P/E likewise the lowest (ATI 40.3x vs. HWM 51.9x and CRS 48.0x). The deepest-moat layer trading at a 15-30% discount is, in our view, a systematic mispricing.
4. ATI’s core moat is a ~40-year qualified-supplier record with zero quality escapes - a time-based moat that capital can neither replicate nor accelerate. Per our channel checks, even a new entrant with unlimited capital would need at least ~10 years to earn Boeing-grade Ti-6Al-4V qualification. FAA full-traceability qualification, once earned, remains effective indefinitely, and customers switching suppliers face multi-year requalification of their own - a two-way lock-in that gives revenue exceptional stickiness.
5. Five structural demand drivers are stacking, extending the industry’s demand growth across multiple cycles: (i) chemistry-locked titanium intensity in composite airframes (~15% titanium by weight vs. ~5% for aluminum designs); (ii) MRO (maintenance, repair and overhaul) demand at record levels with a multi-year backlog (counter-cyclical); (iii) the structural step-change in space: ~39 Raptors per Starship stack at 800kg-1t of nickel superalloy per engine (vs. only ~125kg for the prior-generation Merlin), i.e., ~25-30x a Falcon 9 per vehicle; (iv) AI-datacenter-driven industrial gas turbine (IGT) superalloy demand (the three major turbine OEMs hold over 200 GW of firm orders plus capacity reservations, with delivery slots sold out through 2028-2030); (v) reactor-grade zirconium/hafnium demand from naval nuclear and SMRs (ATI is the Western Hemisphere’s primary supplier).
6. Tight supply and long-term contract repricing are sources of earnings upgrades not yet embedded in Street models. Industry VIM melting capacity is running flat out; announced expansions (ATI 11,000t of VIM and Carpenter 9,000t, both commissioning in 2028 with qualified output from 2029) still fall short of the ~30,000t aerospace supply gap in 2029-30, with IGT demand adding another ~10,000t on top - and mills are deliberately restraining capex to defend pricing. Since 2023-24, OEMs have shifted to 10-12-year LTAs with two-way fixed-volume commitments; base prices step up roughly 10% per year at re-signing and spot has moved faster - “security of supply over price” is the prevailing OEM posture.
