A distinct two-tier market has emerged in ferro-vanadium in Europe, where one side has lost faith in the ability of prices to remain strong, while the other believes they have further to go on the upside.
Market participants reported deals ranging from less than $22 per kg all the way up to $24 – and for smaller tonnages, even higher. This led to a price range of $21.80-24 per kg on Wednesday May 20, from $22.80-23.50 on May 15.
A certain amount of volatility has emerged in the market as the two trends compete with one another, meaning a much wider spread was quoted.
Speaking in support of the high end of the range, a trader suggested it is unlikely there are large tonnages available in Rotterdam.
“On the spot market, it’s difficult to see traders sitting on 200 or 300 tonnes for months and months,” he said.
At the other end of the spectrum, a few steel mills are understood to have purchased material below $22, including one deal for delivery later in June, implying a fixed end-point for the rise in prices.
“Ferro-vanadium is not strong any more. […] If nobody buys in the next couple of days, maybe we will see lower prices,” a second trader said.
The issue, according to those who are more bearish, is that there is not enough end-user activity and no new information to provide support to prices: the news from Vanchem and Evraz Highveld had already been priced in.
On the other hand, according to those who are more bullish, there may be serious supply shortages on the cards, and buyers may turn to the spot market to try to fulfil their needs before prices rise even further, implying a likely spike in demand.
Indeed, one seller stated that he has begun to receive enquiries from customers with whom he has not concluded any transactions in several years, suggesting an impending increase in spot activity.
Conversely, if more end-users do not enter the market in the coming days, the upside will be limited.
Until such time as the two sides of the market converge, furthermore, spreads are expected to remain broad, as there is no clear consensus.
Vanadium pentoxide prices rose to $3.90-4.50 per lb, from $3.70-4.10 previously.
Claire Hack
chack@metalbulletin.com
Twitter: @clairehack_mb