GLOBAL VANADIUM WRAP: US prices pressured upward; China rally stalls with regional discounts intact

The US ferro-vanadium market was the stand-out performer last week as tight supply of spot material and relatively low prices compared with other global regions pressured US prices upward. Meanwhile, the rally in the Chinese market stalled as the elevated domestic prices deterred exports.

• US market strengthens on tight supply, elevated international prices
• European ferro-vanadium price moves limited by slow summer activity and profit-taking
• Producers, traders target Chinese market participants as the country’s exporters become buyers

US market strengthens
The US ferro-vanadium market strengthened amid tight spot supplies and elevated international prices.

US spot prices for ferro-vanadium strengthened to $19.5-19.8 per lb on August 24, up 3.4% from $18.5-19.5 per lb, according to Metal Bulletin sister publication AMM’s latest assessment.

In recent weeks, price upside has been curbed by inactivity, but the spot market saw a slight increase in activity last week.

With mills expecting higher contract prices for September, some have attempted to secure extra material under August contracts, with varying levels of success.

“The market has picked up some. It looks like some suppliers are short on material at the end of the month and some of their contract customers are in the spot market,” a supplier source told AMM.

This renewed spot market interest is expected to pick up as the market moves out of the summer and closes in on the fourth quarter.

“I expect the spot market will be busy in the next two weeks with suppliers at maximums with contracts, so those who truly ‘need’ material are going to have to go to spot,” a second supplier sources said.

European market consolidates
Profit-taking and slow end-user demand prohibited further gains for ferro-vanadium prices in Europe last week, though the market continued to consolidate at higher levels.

Metal Bulletin assessed ferro-vanadium prices in a range of $42.50-43.50 per kg, delivered duty-paid in Europe, on August 25, up from $42-43.50 per kg a week earlier.

European ferro-vanadium prices are up 63.5% compared with six weeks ago, largely on a bout of trader buying in late July. As a result, some sellers are open to bids with profit-taking in mind.

“There are still little pockets of material to come back into the spot market,” a trader source said.

“People bought six weeks ago at much cheaper prices, that’s the main reason why prices haven’t risen more in Europe,” a second trader said.

Trades captured over the past week were slim, and for half truckloads of material or less. Most consumers are believed to be well stocked for their immediate needs in September, slowing the outflow of Europe’s relatively cheaply-priced units.

While prices in the Chinese export market have held at a considerable premium, leading market participants to suggest European prices will have to catch up, some traders expressed frustrations at the slow pace of gains.

“Why bother selling in Europe?” the first trader said.

Sellers instead are pursuing trades in the cif and duty-unpaid markets, which have proved more liquid and allow for greater margins.

Chinese export market subdued
In contrast, China’s export market has been quiet as offers from Chinese exporters remain higher than the closing prices in the international market. Instead, Chinese exporters are considering making purchases to carry out their long-term overseas orders.

A Chinese exporter purchased a batch of ferro-vanadium from a producer outside China in mid-August, sources confirmed to Metal Bulletin.

Undeterred by international buyers’ unwillingness to pay the current China premium, sellers’ offers in the export market held firm for both V2O5 and ferro-vanadium last week. Prices are supported by supply-tightness in the domestic V2O5 market following environmental inspections and production cuts in vanadium-producing provinces.

Metal Bulletin assessed fob China’s ferro-vanadium min 78% prices at $55-60 per kg V on August 24, unchanged from a week earlier.

Chinese sellers are unwilling to review their offers given the potential to achieve stronger numbers in the domestic market.

“Prices in the domestic vanadium market have softened as downstream steel mills have replenished stocks, [but] prices accepted by suppliers for ferro-vanadium are still around 190,000-200,000 yuan ($28,486-29,985) per tonne, supported by low availability of V2O5 in China,” a ferro-vanadium producer said.

The source assessed ferro-vanadium export prices at $57-60 per kg, fob China, based on the concluded prices in domestic market, but added he was unwilling to quote in the export market owing to the current discount relative to prices in China.

V2O5, and therefore ferro-vanadium supply, remains tight in China, supporting the buoyant outlook on the market.

“Prices in China’s V2O5 market dipped by only 15,000-20,000 yuan in the last two weeks due to weakened demand from downstream steel mills, but the tight supply persists as production disruptions in Sichuan province continue and suppliers are not pessimistic about the market’s future,” a V2O5 producer said.

“Sellers insist on prices around 185,000-19,500 yuan [$12.5-13.3 per Ib V2O5] in China,” the producer added.

A source at China’s largest vanadium producer, Pangang Group, told Metal Bulletin that they do not have V2O5 stocks to quote now, while their offers were $12.3 per lb one week ago.

Metal Bulletin’s assessment for V2O5 min 98% fob China was at $12.3-13 per Ib V2O5 on August 24, flat with the previous week.

Meanwhile, V2O5 prices in Europe rose 4.2% week-on-week as consumer demand returned.

Metal Bulletin assessed European V2O5 prices in a range of $9.40-10.40 per lb, in-warehouse Rotterdam on August 25, compared with $9-10 per lb previously.