Ferro-vanadium climbs to near 2-year high; V2O5 nears 1-year high on tight supply, good demand

European vanadium prices continued to climb in February amid tightening prompt inventories and better-than-expected end-user demand, market sources told Fastmarkets.

Fastmarkets’ price assessment for ferro-vanadium basis 78% V min, 1st grade, ddp Western Europe rose by 4.9% to $33.70-34.70 per kg on Wednesday February 17 from $30.70-34.50 per kg on February 12. The market is at its highest since June 2019, when prices stood at $34.45-36.00 per kg.

The alloy’s price is up by more than 35% since the beginning of 2021, when it stood at $25.00-25.50 per kg, Fastmarkets’ data shows.

Spot market activity for the alloy and oxide markets has picked up in the past few weeks, with end-users coming into the market with larger-volume inquiries, market sources told Fastmarkets.

The oxide market has also moved higher. Fastmarkets’ price assessment for vanadium pentoxide, 98% V2O5 min, in-whs Rotterdam climbed by 3.3% to $6.90-7.30 per lb on February 12 from $6.75-7.00 per lb on February 5.

The European oxide market is trading at its highest since April last year, when prices stood at $6.90-7.45 per lb. Prices are up more than 31% since the beginning of the year, when the market stood at $5.30-5.50 per lb, according to Fastmarkets’ data.

“Availability is tight, and it is in very few hands,” a trader said. “Prices are moving very fast and it is difficult to find material - people are holding off.”

Demand from steelmakers in Europe is rising amid limited material availability, market sources said, with much of the previously available material exported to China in the second half of 2020 due to arbitrage opportunities. Chinese ferro-vanadium traded at a premium over its European counterpart throughout the second half of 2020.

“Consumers are choosing to declare maximums on optional volumes in their long-term contracts leaving producers with very little to offer on the spot market,” a second trader said.

Contracts for 2021 included increased flexibility on volumes, reflecting sellers’ struggles to lock in volumes while sentiment and demand were weak throughout most of last year.

The European vanadium market trended lower for most of 2020 due to persistently weak demand related to the Covid-19 pandemic and resultant steel mill shutdowns. Prices started to move up at the end of last year, and inventories tightened following China’s large imports of vanadium in the first half of 2020.

Higher freight costs and the dearth of available container space are also supporting higher vanadium prices. The combination of fewer vessels on the water, an imbalance in trade flows to and from China and competition for cargoes has been responsible for a rapid increase in shipping costs in the past two months, sources said.

Still, some market sources questioned the sustainability of the recent price rally.

“Next week should be interesting with China coming back from holidays,” a supplier said. “If prices continue to move quickly, the arbitrage window will open and China will look to export material again.”

Said a second supplier: “I’m very happy to take profits at these levels, but I suspect there will be a few others in the same position. My strategy will be to get out before the producers lose their nerve and come back to offering. Make hay in the first quarter whilst the sun is shining.”

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