TEX reported that when the movements of vanadium prices in the last 5 years have been traced, its high volatility has been strongly impressed, because vanadium prices had extraordinarily soared in twice of 2005 and 2008. However, Owing to a crisis of the world economy caused by the Lehman shock, prices of ferrovanadium and vanadium pentoxide had fallen considerably in 2009 and rallied somewhat in 2010 but an extent of the recovery was only 20% in comparison with the prices prevailed in the preceding year of 2009.
While prices of nickel, molybdenum and chrome, which are raw materials to produce special steels (high quality steels), had rebounded in 2010 by approximately 40% compared to those in 2009, a rally of vanadium prices was moderate. The background was that an expansion of vanadium production in 2010 was larger than a recovery of vanadium consumption in the year. In order to cope with a shrink of the world demand for vanadium, producers endeavored to reduce rapidly their vanadium output and attempted to adjust their supply of vanadium but, as a result of these actions, an issue of the overproduction was carried over to the next year of 2010. The global situation of vanadium supply in 2010 was still unable to get away from the oversupply.
According to an estimation by Evraz of Russia, which is the largest producer of vanadium in the world, the quantities (on vanadium content base) of vanadium produced and consumed in the world in the calendar year (January to December) of 2010 were thought to be production: 64,000 tonnes and consumption: 61,000 tonnes. Therefore, the world market of vanadium was still unable to break away from confusion and a depression on supply and demand of vanadium in 2009.
For a reference, the quantities (on V content base) of vanadium produced by the two major companies in the calendar year of 2010 were Evraz= vanadium slag: 20,969 tonnes (increased by 8.1% from that in 2009) and ferrovanadium: 13,507 tonnes (increased by 68.3% from that in 2009) and Xstrata (Rhovan)= vanadium pentoxide: 21.87 million pounds (increased by 90% from that in 2009) and ferrovanadium: 4,311 tonnes (increased by 89% from that in 2009).
The world output of crude steel in 2010 came up to 1,400 million tons, having had a substantial expansion of 15% compared with that in the preceding year of 2009. Accordingly, the world consumption of vanadium in 2010 had a considerable increase of 20% compared to that in 2009 and a tempo to revive the global demand for vanadium showed a basic tone to be on an upturn but, because of a large decline of vanadium consumption in 2009 (decreased to approximately 50,000 tonnes per year), a substantial recovery of the world consumption was carried over to 2010.
The unit prices of vanadium products averaged on movements in 2010 was USD 30 per kilogram of V for ferrovanadium and USD 6.91 per pound of V for vanadium pentoxide respectively. When these unit prices on average in 2010 are compared with USD 25 per kilogram of V for ferrovanadium and USD 6.03 per pound of V for vanadium pentoxide, the prices in 2010 had only a rally of 20%. Also, the extents of movements on prices of vanadium products in 2010 were ferrovanadium: a higher side of USD 34.50 per kilogram of V (in May) against a lower side of USD 24 (in January) and vanadium pentoxide: a higher side of USD 7.52 per pound of V against a lower side of USD 6.35, having shown a small extent of its movements as an unusual case.
The movements of price for ferrovanadium in the past years were in 2005: a higher side of USD 130 per kilogram of V against a lower side of USD 85 and in 2008: a higher side of USD 90 against a lower side of USD 61. This large difference of prices was due to a considerable gap (a shortage of the supply), having reached a peak at that time. After that, with the year of 2008 as a turning point, a global balance on supply and demand of vanadium was maintained. This change of the supply situation was caused by an increase of vanadium output at its producers. However, reflecting a depression of the world economy in 2009 arisen from the Lehman shock, the total quantity of vanadium produced in the world in 2009 had an excess of 10 million pounds per annum on the basis of vanadium pentoxide and an aftereffect of this overproduction was considerable.
The main countries, having produced vanadium, have been limited. The 64,000 tonnes of vanadium presumed as produced in the world in 2010 are estimated to have been shared mainly to China: by 50%, South Africa: by 21%, Russia: by 9% to 10% and USA: by 9% to 10%. Accordingly, the structure to be able to supply vanadium has been restricted to a few players. Also, the sources to process raw material for vanadium production consist mainly of vanadium slag (to obtain mainly in the course of producing pig iron): 59%, vanadium ore: 26% and to recover from spent catalyst and so on: 15%.
Furthermore, the fields to consume vanadium are for steel: 92%, for titanium: 4% and for chemicals: 4%. Therefore, both of raw material for vanadium production and consumption of vanadium products have been strongly connected with steel production.
If the world production of steel would be able to grow mainly in China on an annual rate of 4% to 5%, the global consumption of vanadium in 2025 is estimated to be on a scale of 132,000 tonnes per annum on vanadium content base and vanadium is supposed to have a high potentiality to grow for the future. The new market for vanadium is expected to be seen in the sector to preserve energy. China is also certainly expected to be a promising market for vanadium consumption, particularly in its steel industry.
On the other hand, in order to comply with the demand for vanadium, new vanadium projects are currently being investigated in Australia (by Aurox and Reed), in China (by Sino Vanadium), in Brazil (by Largo), and so on. Although most of these vanadium projects finished its feasibility study, any project to commence commercial production of vanadium in 2010 so far does not appear. The Windimurra vanadium project in Australia, being proceeded by Mineral Resources, is under the construction.
The process to extract vanadium from vanadium slag has been conditioned to be limited to use vanadium containing iron ore (magnetite) and, from this point of view, primary producers to use vanadium ore are expected to expand their vanadium production. In this case, a reasonable cost for production of vanadium pentoxide is estimated to be USD 13.50 per pound of V but a current level of price for vanadium pentoxide is still unable to return to this one. In spite of the soared prices of vanadium products as seen in several years ago, the vanadium prices at present are still far from its favorable circumstances.
(Sourced from TEX Report Limited)
