Sweating bullets about vanadium in 2019? Here’s what could happen

Date: Dec 21, 2018

Vanadium was one of 2018’s standout performers, as spot prices surged from briefly above $US37 per pound — up from under $US5 in early 2017.

Vanadium pentoxide’s (V2O5) meteoric rise was attributed to a structural shortage of vanadium in the market – brought on by China’s stricter environment standards and its policy to double the vanadium used in rebar (a reinforcing steel used in concrete).

Steel uses 92 per cent of vanadium production. It takes only a small amount of vanadium to double the strength of steel and reduce its weight by 30 per cent.

David Gillam, boss of specialty consultancy Mastermines, says the late December price drop to $US20 a pound was bigger than expected – but could be generally attributed to seasonal factors.

The Chinese cut steel production substantially during the winter for environmental reasons.

“A lot of people don’t realise that steel production in China coming into winter is cut pretty dramatically to keep a lid on pollution,” Mr Gillam told Stockhead.

“This year we estimate between 30 and 35 per cent [of capacity will be cut], depending on the location of the steel mill.

“We believe what caused this latest, fairly stark decline [in vanadium spot prices] is sellers not wanting to sit on what they had over that winter period — so they pushed it out into the market.

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