European ferro-vanadium traders stock up before consumers return; US sellers take profit

Date: Sep 04, 2017

Buyers re-entered the European ferro-vanadium market last week, seeking to boost their inventories ahead of the region’s end-users return after the summer break.

  • Buyers’ return to the market sees European activity increase and prices start to move higher again after relative stability in August.
  • US buyers slower to return to the spot market due to wide margins encouraging profit taking, despite strong fundamentals.
  • Domestic tightness prevents Chinese exporters from offering, as the local market remains at a premium.

European ferro-vanadium prices started to tick higher at the end of last week, after a relatively stagnant market and lacklustre end-user interest in August.

Metal Bulletin assessed ferro-vanadium prices in the range of $42.85-45 per kg, delivered in Europe, on Friday September 1, up from $42.50-43.50 per kg previously.

While business was still transacted in the $42s late on Wednesday continuing to Thursday, prices quickly paced higher on Friday, with traders restocking and consumers indicating their return to the spot market this week, following the summer break.

“The situation seemed to be stable but it has completely changed this morning,” a producer said on Friday.

Several market participants reported unsuccessful efforts to up their volumes against earlier offer prices, in anticipation of prices making gains again this week.

After a 54% increase in prices in the second half of July, and a bout of trader activity, European prices consolidated their gains and were comparatively steady in August, with most end-users out of the market for their summer break.

“Maybe buyers have been waiting to see if the price comes down,” a distributor added.

Some traders took profit in the low $40s, matched by producers, but declined to reduce their offers as Chinese prices for ferro-vanadium held firm.

“We don’t have huge stocks so we’ve been pushing higher with our [ferro-vanadium] offers,” a trader said.

V2O5 prices surged ahead of ferro-vanadium last week in Europe, with spot material held in a limited number of hands.

Metal Bulletin assessed V2O5 prices as $11-11.25 per lb, in-warehouse Rotterdam, on Friday September 1, a jump of 12.4% compared to the previous week.

Spot buyers in the US are a little later to return to the market than in Europe. Ferro-vanadium market prices in the region widened last week, as spot market activity remained thin during the closing week of the summer.

Metal Bulletin sister publication AMM assessed ferro-vanadium prices in a range of $18.75-20.75 per lb, in-warehouse Pittsburgh on August 31, widening from $19.50-19.80 per lb previously.

The spread of prices expanded as a lack of consistent spot market activity fostered market uncertainty.

Several market participants were seen offering and concluding transactions in the upper half of the range.

“It seems like it’s starting to move pretty safely over $20 at this point,” a supplier source said.

“Most people have tightened back up and started pushing numbers up after seeing what’s going on in China,” he added.

Still, at least one mill was able to secure material at the low end of the range, below $19 per lb.

“That’s what happens when you have a few sellers well in the money already, and they don’t feel comfortable holding onto units,” a second supplier source said to AMM, alluding to the rapid rise in pricing over the last month.

Market participants expected prices to consolidate toward the high end of the range moving forward, as cheaper inventories are expended.

“On the flip side, we’ll see what happens in September when their cost basis is a lot more based on August prices. The market should be more consistent at these higher numbers,” the second supplier source added.

Meanwhile China’s vanadium market has been in stalemate over the past two weeks. Buying interest has been muted by high prices, but suppliers have been unwilling to cut their offers due to low stocks and expectations that production levels will remain suppressed in the short-term due to stringent environmental inspections in the country.

Tightness has persisted in the Chinese market as a result of environmental checks in July and August, removing 25% of average V2O5 production from the physical market over the past two months.

Sustained higher prices in China’s domestic market, compared with the international market, means Chinese vanadium exporters have lost interest in quoting to overseas buyers.

Metal Bulletin’s assessment for V2O5 held flat for a third week at $12.30-13 per lb, fob, on August 31.

One exporter reported they had stopped offering V2O5 to export enquiries two months ago, given that they can offer at around 190,000-200,000 yuan per tonne ($13.10-13.80 per lb) in the domestic market.

Another major player added that it has halted offers for the past two weeks, with no material to offer to spot enquiries.

The same is true of the ferro-vanadium market.

“I have been concentrating on domestic sales and have not offered in the export market for months, but if I quote, it will be $60 per kg, based on the domestic level,” a north east exporter told Metal Bulletin.

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