bron : in the right vein
On January 8, 2020 By Alice AgoosIn Uncategorized
Ferrovanadium prices started the year marginally higher than in December, but most suppliers doubt that prices will rise more than a few dollars in 2020.
Inter-trade sales in the US reportedly have been concluded at $10.50-10.80 per lb. One seller insisted that there were few offers below $11. Nevertheless consumer sales were reported at $10.45-10.65 per lb. Several sellers said they were pleasantly surprised by the number of inquiries they had received. “We are hearing from people who, in December, told us they were well covered. They may just be price checking, but still…” said a trader.
European FeV prices were on either side of $23 per kg, a dollar higher than prices in mid-December.
Producers and traders surveyed by intherightvein.com gave fairly similar predictions for 2020. Many pointed out that consumers have carried over 2019 contract purchases into the first quarter. Prices, they predict, will rise only gradually, perhaps reaching $11 per lb by the end of Q1 and then climbing to $12.50 in Q2. The traditionally slow third-quarter could result in FeV prices slipping again.
One supplier expects prices to peak at slightly above $14.50 per lb, but he cautioned that prices could tumble in July with the combination of weaker demand, release of stockpiled material from Energy Fuels and Largo taking over sales of its vanadium from Glencore. (Energy Fuels has been stockpiling vanadium recovered from the tailings ponds at the White Mesa uranium mill in Utah for several months and has sold only small quantities. Glencore’s exclusive off-take agreement with Largo ends in May.) By some estimates Energy Fuels could have stocks of 300 mt of V. The company produced 1.3-million lb of V2O5 in the first nine months of 2019 and expected to produce 160,000-200,000 ppm of V2O5 in the fourth quarter.
The long-term average price of FeV is $12 per lb. After a spectacular rise in the second half of 2018, US prices hit $56 per lb in November 2018 while European prices were $130 per kg. By Jan 2019, US prices had slipped to $45 per lb and European prices were $70 per kg.
“We probably are at the floor,” said one supplier. “Demand is good. We are expecting most of the steel producers that substituted niobium when FeV prices escalated to switch back.”
By many estimates, niobium substitution doesn’t make sense when FeV prices are below at $11.50-12. Even so, some mills are reluctant to resume using FeV because of its history of price volatility. Also, while FeV allows for faster throughput, some mills have found that niobium offers some quality pluses.
A slowdown in steel production in the US and Europe could derail FeV price forecasts, sources admit.
A lone bull forecast was offered by Terry Perles, Principal of US Vanadium LLC. He expects Chinese vanadium consumption to rise in 2020. V2O5 stocks in China are low, Perles said, and China’s net exports have slumped to less than 100 mtpm of V compared to 800 mtpm. China’s vanadium imports have increased, he noted.
The spot market in the West is soft, Perles said, but demand is up in China. Even though China’s production also has risen 30-35%, much of that production is higher cost and “under water” when V2O5 prices are $10 per lb or lower. (Today, V2O5 prices are around $5 per lb, and many of the high cost Chinese producers continue to operate.)
Perles predicts a tight supply situation for 2020. When supply and demand is balanced, he said, V2O5 average $6 per lb, but when tight supply conditions occur, V2O5 prices can rise to $14-15.
“Right now, no one has missed receiving a shipment of vanadium,” countered a supplier. “There is plenty of inventory. Any scenario in which prices reach $14 would not happen over night. Production cuts in China take time. Rejiggering mills to use vanadium rather than niobium takes time. And during that time many other factors can come into play.”
China can be the impetus for prices rising or falling. During much of 2019, the higher domestic prices in China provided large Western producers with an outlet for their vanadium. Since November, however, Chinese vanadium prices have been relatively stable in the high $24s per kg (when VAT is subtracted). The narrower gap between Chinese and European prices could create the situation of more availability in Europe.