Lower Costs, Demand Weighs On China’s FeV Prices

Chinese ferro-vanadium prices are expected by market participants to soften further in the coming days because of lower pentoxide flake feedstock prices, reduced demand and a fall in tender prices paid by steel mills.
Spot prices for 50pc grade alloy have extended a downtrend since mid-July as most alloy suppliers have cut their offer prices in the past four or five weeks on expectations of a further fall in demand and lower tender prices from steel producers.
A number of steel mills have reduced their run rates since July during output restrictions by the Chinese government. Beijing aims to keep 2021 steel output flat with 2020 levels, with state-owned mills having been ordered to cut steel output and exports with provinces also directing mills to keep output flat.
China’s output of crude steel fell to 86.79mn t in July, down by 8.4pc from a year earlier. Average daily output last month fell to 2.8mn t, down by 10.5pc against the previous month, according to data from the National Bureau of Statistics.
Crude steel output during January-July reached 649.33mn t, up by 8pc against the previous year because of higher output in the first half of this year. January-June output was up by 11.8pc to 456.38mn t.
Some steel mills, including Jiangsu Yonggang Group,Hebei Iron and Steel, Hebei Xinxing Ductile Iron Pipes, Nanjing Iron & Steel Group, Fushun Special Steel and Laiwu Iron & Steel have cut tender prices for August delivery because of sufficient spot availability and falling spot prices.
Mainstream tender prices from steel mills today fell to Yn134,000-136,000/t delivered, paid by acceptance bill with value-added tax (VAT),down by 4.92pc or Yn7,000/t from Yn140,000-144,000/t on 2 August.
State-owned Xinyu Special Group today bought 30t of the alloy at Yn134,000/t delivered, paid by acceptance bill with VAT. The firm made no purchases for July delivery because of ample stocks.
Pentoxide flake dips
Prices for 98pc grade pentoxide flake today fell to Yn123,000-130,000/t ex-works, the lowest level since 18 June, down by 4.35pc from Yn131,000-133,000/t from the start of July in response to weaker buying interest from alloy smelters caused by a continued fall in demand and tender prices from steel producers.
A Chengdu-based alloy producer said that several alloy smelters purchased small volumes of flake at Yn122,000/t ex-works paid by cash recently, expecting alloy prices to further move down this week.
“Spot alloy prices are low for us given unprofitable margins,” a Jinzhou-based smelter said, planning to suspend operations in the coming days and will only resume production when prices start to rebound.
A Liaoning-based smelter expects prices not to rise in the near future because of sufficient supplies and a continued fall in demand from steel sector, although a number of small-size smelters have suspended output in the past couple of days.
Most other market participants expect prices to fall this week after steel mills completed their tender purchases for August delivery.