Vanadium growth is set to continue through 2013 and beyond. Roskill has analysed supply and demand of vanadium in different market sectors, and its position in the steel industries. In its latest report, Vanadium: Global Industry Markets and Outlook, 13th edition 2013 Roskill notes world vanadium consumption peaked at 78,000 t V in 2012. Growth in demand is set to continue through 2013 and beyond, underpinned chiefly by growth in steel in construction in developing nations.
However, the precise rate of growth in consumption will be dependent on a number of factors, most notably new regulations for Chinese high-strength construction steel, which have the potential to significantly increase vanadium demand.
Over 90% of vanadium is consumed as ferrovanadium in the production of steel. Growth in world consumption has been driven by Asian demand, particularly in China, over the past few years. In 2012 China accounted for 34% of world vanadium demand compared to just over 20% in 2006.
New design codes in China aim to restrict the use of lower strength reinforcing bars and government directives require the production of high vanadium content alternatives. This has the potential to increase the intensity of China’s vanadium usage in steel, which currently lags those of developed countries such as the USA.
With steel production forecast to rise by 3%/y and the expectation that China will need to consume additional quantities of vanadium to meet new rebar regulations, increasing quantities of vanadium will be required to meet global demand.
China is now the world’s largest producer of vanadium and increases in vanadium demand will, for the most part, be met by planned expansions to existing production facilities. China is in the process of significant expansion of co-product vanadium capacity, with further expansions scheduled over the next five years. Whilst production is spread across approximately 40 main producers as well as an estimated 150 small-scale operations, volume production is dominated by Pangang Group Steel Vanadium and Titanium in Sichuan, and Chengde XinXin Vanadium & Titanium Co in Hebei.
A number of new projects in the rest of the world (ROW) are expected to become operational in the short term, aiming to meet future increases in vanadium demand. Atlantic Ltd, which operates the Windimurra mine in Australia (pictured), started production in 2012 and is expected to produce at full capacity by the end of 2013. Largo Resources, reports that production will start at its Maracás deposit in Brazil within the next year.
Increased production from these and other potential new sources is expected to keep the market in balance to 2017, although much remains dependent on the price for vanadium, which may render a wide number of producers in China and the ROW uneconomical if it falls below a certain level.
Fluctuations in the supply and demand balance have underpinned significant volatility in vanadium prices over the past few years. Prices reached peaks of $27.00/lb V2O5 in 2005 in response to demand outstripping supply the previous year. Whilst prices then fell back, they remained high during 2006 and 2007 because of strong consumption by the steel industry during a period of sustained growth in steel production.
Prices rose again in prompt response to interruptions to production in South Africa and China between in the first half of 2008, but fell again once the effects of low consumption, caused by a sharp fall in steel production, were felt in the fourth quarter. Following this sharp decline, prices remained steady throughout the global economic downturn, although average prices did drop marginally between 2010 and 2012.
Roskill expects the market to remain broadly balanced from 2012 to 2017. An increase in Chinese consumption, driven by changes to government policy, is forecast to result in demand slightly outstripping supply to 2014, by which time increased capacity in China and the ROW is expected to reverse this trend. A marginal market surplus is forecast between 2014 and 2017, albeit a surplus representing around 5% of total demand.
With demand expected to marginally exceed supply in 2013 and 2014, Roskill expects a recovery in vanadium prices over this period. Consumption is then forecast to slightly lag production as new capacity comes on stream between 2015 and 2017 and prices are expected to remain relatively stable. Vanadium pentoxide prices are expected to reach $11.00/lb V2O5 (in 2012 US dollar terms) by 2017.
The report contains 253 pages, 130 tables and 82 figures. It provides a detailed review of the industry, with subsections on the activities of the leading producing companies. It also analyses consumption, trade and prices.