CRU: A Price Spike with Staying Power – A Look into the Vanadium Market
Date: Jul 03, 2018
LONDON, July 2, 2018 /PRNewswire/ —
Vanadium prices have risen sharply since mid-2017, sending investor interest – and end-user concerns – soaring in this often-overlooked commodity. Traditionally just a minor, though important, alloying element in steelmaking, vanadium is the potential next big thing in grid-scale stationary energy storage solutions. This Insight from CRU examines the origins of the price spike and explains why the higher price environment will last longer than in the past.
Why did prices surge?
Between June 2017 and May 2018, prices for ferrovanadium DDP Europe increased from $12/lb to $30-32/lb, the highest level since 2008. Other ferrovanadium benchmarks surged too, along with the Chinese vanadium pentoxide (V2O5) feedstock price which rose from a typical $5-6/lb range to over $15/lb in May 2018.
A coincidence of cyclical, structural and one-off factors have triggered this:
- In the years leading up to 2017/18, weak steel and vanadium prices drove out high cost co-product1 supply. The closure of Highveld Steel and Vanadium in South Africa in 2014 on its own cut out ~12% of global vanadium supply. Market pressures for Chinese co-producers were reinforced by a low international iron ore price which cut raw material costs for their domestic competitors: Chinese co-product supply of vanadium dropped by 22% between 2014 and 2016.
