Top Vanadium Producer Sees Demand Rising After Prices Slump

Evraz Plc, the world’s largest vanadium producer outside China, said steelmakers are boosting their use of the metal again after it slumped as much as 75% this year.

Vanadium, used to strengthen steel, peaked at more than $120 per kilogram at the end of 2018 after No. 1 consumer China implemented new construction standards, stipulating the use of such toughened alloys in houses and infrastructure. Prices of the metal plunged this year as steelmakers partially substituted it with alternatives, such as niobium and titanium.

Evraz, which had revenues of about $1 billion last year from supplying about 15% of the world’s vanadium, is “more than satisfied” with the current price, Alexander Erenburg, the company’s vice-president for the metal, said in an interview in Moscow. Vanadium remains above the historic average, while encouraging demand from steelmakers, he said.

“The current vanadium price of $30 to $40 per kilogram makes it optimal for steel alloying both in terms of costs and the technological process,” he said, adding that steelmakers had substituted 15% of their consumption of the metal.

Evraz, in which billionaire Roman Abramovich is one of the largest investors, could sustain even lower prices as its main source of vanadium is slag, a byproduct in the steelmaking process. That makes the Russian steelmaker — which processes the slag at plants in Russia and the Czech Republic — the lowest-cost vanadium producer.

Some Evraz slag — rich in vanadium because the ore comes from its Kachkanarsky mine — is also processed by Austria’s Treibacher Industrie AG under accord. About 90% of global vanadium supply is used as an additive in steelmaking.

The Chinese rules relating to construction steel boosted global vanadium demand by as much as 8,000 tons to 95,000 tons in 2018, according to Erenburg. Chinese imports of niobium fell 30% in June and July as the steel industry returns to vanadium, he said.

European and Russian steelmakers have been slower to react, said Erenburg. Some haven’t noticed the decline in vanadium prices, while others stopped making certain products when the metal spiked, he said.

Consumption may grow further, if Russia and Europe adopt similar regulations, he said.

The industrial batteries market may also bolster growth. So far it is responsible for only 3% to 5% of demand for vanadium, but the market is now recovering as prices decline, Erenburg said.