May 16 Vanadium prices have climbed to four-year
highs due to tighter supplies created by a shift in production
processes and stringent environmental policies in top producer
Vanadium is used to strengthen steel and in a new generation
of batteries, which advocates say has advantages over lithium
batteries in terms of grid storage.
There is a current shift towards more vanadium being
produced from ore rather than as a steel by-product while China
tackles environmental regulations, traders and analysts said.
Ferro vanadium VAN-FERRO-LON prices have risen nearly 23
percent this year on the spot market in Europe to around $28 per
kilogram, levels last seen in April 2013.
Vanadium pentoxide VAN-PENT-LON prices also hit their
highest since April 2013 at $6 per pound. Prices have risen 29
percent this year.
"The type of iron ore being used to process vanadium has
changed and more steel producers are using Australian iron ore
and less vanadium rich magnetite ores," analyst John Meyer of SP
Earlier this month, mining and commodity trading firm
Glencore said it produced 5.1 million lbs of vanadium
pentoxide in the first quarter, down 10 percent from the
corresponding quarter last year, due to ongoing maintenance.
"Demand at the moment is possibly a bit bigger than
supply... The Chinese government may increase the requirement of
vanadium in rebar so that the steel rebar is more stronger,
further increasing the demand," a London-based trader said.
According to traders' estimates, global vanadium production
in 2016 was about 75,000 metric tonnes, while global consumption
came in at about 80,000 metric tonnes.
China has been closing mines causing pollution and a lot of
magnetite production is currently shut down, SP Angel's Meyer
China and Russia have dominated global production with
around 60 percent of vanadium output, mostly as a by-product of
Most of the rest comes from South Africa, where it is
produced directly from vanadium ore.
"There were a lot of cut backs two years ago in South
African production...stock levels are not that high," a London-
based trader said.
(Reporting By Eileen Soreng and Nallur Sethuraman in
Bengaluru,; Editing by Pratima Desai and Ed Osmond)