Cheaper Vanadium Imports To China Weigh On Already Weak Domestic Market

The recent rise in ferro-vanadium and vanadium pentoxide (V2O5) import interest in China will likely add further downward pressure on the Chinese domestic market, market sources told Fastmarkets during the Ferro-alloynet International Vanadium Conference on Tuesday September 10.

Some Chinese domestic traders have turned to importing vanadium products into China, stimulated by the continued wide price spread between the domestic and European markets, which has concurrently made it less competitive to ship Chinese material abroad.

Fastmarkets’ assessment of the export price for ferro-vanadium, 78% V min, fob China was $35.50-38.50 per kg on September 5, down by 1.3% from $36-39 per kg in the previous week.

Meanwhile, the ferro-vanadium 78% V min, 1st grade, ddp Western Europe price was at $30.15-31.10 per kg on September 6, down from the mid-week assessment of $30.60-31.10.

This leaves a price gap of $5.35-7.40 per kg between the Chinese and European markets.

Several delegates spoken to by Fastmarkets said they had either imported ferro-vanadium from overseas markets or heard that several hundred tonnes of ferro-vanadium and V2O5 were booked from overseas suppliers for sale in China.

“We bought 20 tonnes of ferro-vanadium from abroad and it will take around 30 days for it to arrive in China,” a delegate on the sidelines of the conference told Fastmarkets, declining to disclose where the parcel originated.

“We have received a lot of inquiries for V2O5. It seems that [Chinese] people are quite interested in buying some volumes,” a second delegate said.

Chinese market participants said they anticipate a narrowing in the price differential between China and Europe with the price of the latter gaining some upward momentum when downstream steel mills return to the market from their two-month long summer vacations.

“What we want to see is the gradual narrowing of the price gap between China and Europe because if the gap is not that wide, we can at least achieve some deals in the export market,” a Chinese ferro-vanadium producer once told Fastmarkets.

The ferro-vanadium price in Europe has disappointed sellers by softening by 2.5% since late August instead of strengthening as had been expected.

“The price trend indicates demand in Europe is still very weak,” a third delegate said. “And supply should be sufficient for the local demand.”

The increased inflow of overseas cargoes will weigh on Chinese domestic market sentiment and put domestic vanadium prices under additional downward pressure. Market participants have cited oversupply as casting a shadow on the Chinese vanadium market for the rest of 2019.

“Several hundred tonnes is not a very large volume for China and I believe it would be not hard to find buyers as long as the price is appealing enough, but the problem is that the gesture will weaken the already weak market sentiment and drive the domestic price down further,” a fourth delegate said.

Previously, some European suppliers had shipped cargoes to China due to the Chinese price being much higher than that in Europe.

In contrast, China’s exports for vanadium products have shrunk also as a result of the wide price gap between the destinations.

China exported 3,186 tonne of ferro-vanadium in the first seven months of 2019, a drop of 19.1% from around 3,938 tonnes over the corresponding period of 2018. Meanwhile, China’s exports of V2O5 totaled 3,333 tonnes over January-July, a dip of 25.3% from about 4,462 tonnes over the same period of last year.