Vanadium Update21 Dec 2018 14:24
From Stockheads website
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.
Prices will bounce in early 2019
Mr Gillam says steel mills begin ramping up again sometime after Chinese New Year (Tuesday February 5), and he expects the vanadium price to strengthen in response.
Mastermines also believes that not all steel makers in China have complied with the new rebar standards yet – the catalyst for the most recent price surge.
“We aren’t sure that everyone has complied with those standards yet, or how much checking is going on to make sure companies are complying,” Mr Gillam says.
“So, it’s possible there’s going to be some more upward price pressure to come from that.
“We find it hard to believe that everyone has complied on time.”
They go on to explain the need long-term for the Vanadium prices need to be lower to help the VRFB manufacturing and how the steelmakers are concerned that more vanadium will be used in the energy storage market. They key to this is the world needs more vanadium. However, they have missed that vanadium can be leased to the VRFB makers and it can be re-used at the end of life (typically expected at 20 years). This is a win-win for Bushveld Minerals.
The good news for Bushveld Minerals we are sitting on the worlds largest high-grade resource and this was made clear in the Bushveld Energy 101 back in November. This can be watched on the Bushveld Energy Website. If you are new to this company you should spend an hour or two and watch this it will open your eyes!
Cheers,
RK
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