Investigation brings US closer to vanadium premium

  • Market: Metals
  • 14/05/21

Market participants expect a decision on the Section 232 investigation regarding vanadium by 23 May, with most predicating an affirmative determination will make the US fully a premium market.

The US Commerce Department initiated the 232 investigation on 28 May 2020 in response to a petition filed by AMG Vanadium and US Vanadium. Section 232 investigations determine the effect of imports on national security. Previous 232 investigations on steel and aluminum products resulted in 25pc and 10pc tariffs, respectively. No action was taken after a 232 investigation on titanium sponge.

The petition proposed two courses of action regarding vanadium oxides, vanadium carbonitrides, ferro-vanadium, and vanadates if the request was granted. One proposal was that the US impose a 40pc tariff on vanadium imports ad valorem. The other proposed recommendation would impose separate quota volumes with a 20pc tariff placed on shipments below a specified annual import volume and a 40pc tariff on volumes above that specified volume, with the quota declining 10pc points each subsequent year for three years.

The US consumes about 94pc of its vanadium for metallurgical purposes, mostly an alloying agent in the steel and iron industry, according to the US Geological Survey.

Most market participants expect a decision one way or the other, even though its possible the US administration avoids a determination altogether. But a slight majority of participants surveyed by Argus expect tariffs to be put in place. Depending on the magnitude of tariffs placed on vanadium products, it will likely make the US a consistent premium market in the global trade, which in recent history was not always the case despite the country's heavy reliance on imports.

FeV supply

US consumers of ferro-vanadium would likely face the most issues in securing supplies. In the first quarter, the US imported 567 metric tons (t) of ferro-vanadium, almost exclusively from Canada and Austria. Currently, there is one domestic producer of 80pc grade alloy, normally operating under a tolling agreement, and a second domestic producer that manufactures 50pc grade alloy from secondary raw materials. It is still necessary to import feedstock to produce 80pc grade alloy, which would impact the cost of production if tariffs were placed on all vanadium products. If 80pc grade ferro-vanadium was scarce, steel mills would likely have to update melt mixes to consume more 50pc grade alloy, squeezing domestic supplies.

Market participants have also floated the possibility that sellers of imported feedstock may declare force majeure if contract volumes are based on a reference price outside of the US, which is often the case with vanadium pentoxide (V2O5). The US imported 1,738t of vanadium pentoxide by content in 2020, according to Commerce Department data. Although there is vanadium available through recycling spent catalysts, the mode of production that AMG Vanadium uses to produce ferro-vanadium, the US is still also heavily reliant on imports, sources said.

FeNb substitution

One typical avenue for steel mills to limit ferro-vanadium reliance is to switch to ferro-niobium. At high enough prices, ferro-niobium becomes cost-effective as a replacement in some grades of rebar. Still over a longer period, market participants doubt that substitution of ferro-vanadium with ferro-niobium would be utilized on a large scale. Consumers typically begin to consider substitution when ferro-vanadium is trading in the $25-27/lb range, sources said.

Several mills made just that switch to use more ferro-niobium in their melt mixes when vanadium prices rose sharply in 2018 and still utilize the alloy to this day. This has led many to estimate that those with the ability to convert to ferro-niobium consumption over ferro-vanadium already have, leaving little additional market share for ferro-niobium to scoop up should prices spike again.

Not all signs point higher

Although many market participants are concerned about the impact the 232 investigation would have on the flow of ferro-vanadium, most market participants are certain that a significant supplier — Canada — will be exempt from tariffs. If exempted, the US would be able to avoid at least the worst side-effects from an abrupt cut in imports.

At the same time, the US government began negotiations with the EU to address the effects steel and aluminum section 232 tariffs have had on allies. These discussions have raised doubts among market participants in the steel, aluminum and vanadium sectors that the current administration is keen to use the 232 option at all to impose tariffs again, diverging from the efforts made by former president Donald Trump.

That said, commerce secretary Gina Raimondo defended the use of section 232 in April during a discussion about trade action against China. Additionally, President Joe Biden issued an executive order in February on America's supply chains for a general review and recommendations on "federal incentives and any amendments to federal procurement regulations that may be necessary to attract and retain investments in [critical minerals]," which includes alloying, recycling, and reprocessing of minerals. Vanadium was deemed a critical mineral in 2018.


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27/03/24

Automakers divert away from blocked Baltimore port

Automakers divert away from blocked Baltimore port

Pittsburgh, 27 March (Argus) — Automakers are adjusting their supply routes following yesterday's collapse of the Francis Scott Key Bridge at the Port of Baltimore, the busiest US port for auto shipments. The Port of Baltimore handled 847,158 autos and light trucks last year, more than any other US port, according to the Maryland state data, with imports accounting for about 75pc of the volume, the Alliance for Automotive Innovation said. With vessel traffic in and out of the port suspended indefinitely automakers said they will reroute deliveries though other east coast ports. This includes General Motors, which said it still expects minimal impact on its operations. Ford said it has already secured shipping alternatives where workarounds are necessary, but did not share details. For Mercedes-Benz, Baltimore is among its busiest ports for imports. The company said it has flexibility to adjust its supply routes and noted ports in Charleston, South Carolina, and Brunswick, Georgia, as other top import locations. The port closure has no effect on Mercedes vehicle exports or parts supply at its Tuscaloosa, Alabama plant, the company said. Volkswagen Group, which includes the Audi and Porsche brands, said it received about 100,000 vehicles last year through Baltimore to ship to US dealers in the Mid-Atlantic and northeast, but its operations will not be limited since its facility is located on the seaboard side of the bridge, at Sparrows Point. Volkswagen said it may see some trucking delays from highway rerouting, however. Toyota relies on the Port of Baltimore primarily for vehicle exports, but said it is not the company's main North American port. Stellantis, maker of numerous brands including Chrysler and Jeep, said it has begun discussions with transportation providers to ensure an uninterrupted flow of vehicles. The US imported 723,435 cars and light trucks in January, up from 634,228 a year earlier, according to customs data. Mexico supplied just over one-third or 2.97mn of the total number of US vehicle imports in 2023, followed by Japan and Canada, with 17.3pc and 16.3pc, respectively. By James Marshall Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Red Sea tensions could halt EU India HRC quota overfill


27/03/24
News
27/03/24

Red Sea tensions could halt EU India HRC quota overfill

London, 27 March (Argus) — Elevated shipping times caused by tensions in the Red Sea could prevent India's hot-rolled coil (HRC) safeguard quota in the EU from overfilling on 1 April, as participants had expected. India shipped just over 520,000t of HRC to the EU in December and January, according to customs data, all of which appears to have been cleared into the first-quarter quota. Including unused tonnage rolled over from the previous quarter, this quota totalled 574,550t, with just 46,934t currently unused, meaning that 527,000t is utilised. This suggests that material shipped from India in February will predominantly comprise the April-June quota of 294,662t. Vessel tracking data show that India shipped 404,582t of flat-rolled products to the EU in February, although the data do not give detail by product. Indian material could theoretically use one-third of the other countries' quota in April-June too, under the safeguard regulation. That quota will fill quickly again, as has been the case in recent quarters. Longer shipment times mean that most Indian material shipped in the second half of February — 215,170t of flat-rolled — will arrive after 1 April, and either be cleared or held over until the next quarter: after day one, any material cleared above the quota amount pays a straight 25pc duty, so it is likely that some will be held over from April-June and clear into the July quota. Vessels going round the Cape of Good Hope rather than sailing through the Red Sea will take an average of 45.5 days to arrive at EU ports from India in April, according to data from Kpler. Vessels arriving by the Red Sea in January were taking around half this time, or even less. This means that around 189,000t of February shipments could be cleared into the April-June quotas on 1 April, plus tonnage held over from the current period, totalling 46,934t for HRC. Assuming that all the material shipped in the first half of February is HRC, the quota would not overfill on day one, even with the material held over from this quarter factored in. But it is expected to fill later in the month. By Colin Richardson Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Chile outlines plan to double lithium production


27/03/24
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27/03/24

Chile outlines plan to double lithium production

Santiago, 27 March (Argus) — Chile will use three different business models to expand its lithium production that it estimates could increase by 70pc by 2030 and 100pc over the next decade, finance minister Mario Marcel said. Chile is the world's second-largest lithium producer with an estimated output in 2023 of 234,000 tonnes of lithium carbonate equivalent (LCE), according to US Geological Survey data. The first model announced late on Tuesday envisages public-private alliances, with the state holding a majority share, in two salt lakes that have been defined as strategic: Atacama in the Antofagasta region and Maricunga in the Atacama region. Public-private alliances will also be promoted in five other salt lakes — covering Pedernales and the Alto Andino project area — where the state will seek the "best agreement" to develop projects with private partners, giving it either a majority or minority role. The third model gives the private sector leadership in the development of 26 other salt lakes in which associations may be formed with state companies but will not be a requisite, said Marcel. Private investors will be asked to submit Requests for Information (RFI) to express interest in these salt lakes in April and the RFI results announced in July. Subsequent tender processes will lead to special lithium operating contracts (CEOL). "During this government, we will sign a group of CEOLs in which the private sector will lead production in which the state will not be a major partner," said economy minster Nicolas Grau. Another 38 salt lakes will be defined as protected areas where development cannot take place to meet Chile's commitments under the Convention of Biological Diversity. Chile has the world's largest proven reserves of lithium but laws passed in the 1970s and 1980s restricted its access to private developers. Chilean SQM and US Albemarle, the country's only producers, operate in the Atacama salt lake under leases with state development agency Corfo. The plan comes almost a year after President Gabriel Boric announced Chile's intention to open lithium mining to private investment in April 2023 as part of its national lithium strategy. By Emily Russell Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Baltimore bridge collapse forces freight changes


26/03/24
News
26/03/24

Baltimore bridge collapse forces freight changes

Washington, 26 March (Argus) — Vessel traffic in and out of the Port of Baltimore, Maryland, has been suspended indefinitely in the wake of a container ship collision early today that brought down the Francis Scott Key Bridge, an accident that will force the rerouting of coal, car and light truck shipments. The prolonged closure of one of the largest ports on the US east coast could have a ripple effect on trade flows across much of the US, as shippers grapple for alternatives in the absence of a certain reopening timeline. Search and rescue efforts are still ongoing in the Patapsco River, after the 116,851dwt Dali headed to Colombo, Sri Lanka, slammed into a bridge support. The crew had lost control of the vessel. The Dali is owned by Grace Ocean and managed by Synergy Marine Group. The Maryland Port Administration said it does not know how long it will take for the shipping channel to be cleared and for traffic to resume. Shipping companies are bracing for a closure of at least two weeks, but many expect the clean-up effort could take significantly longer. President Joe Biden vowed the federal government will provide whatever resources are needed to get the port "up and running again as soon as possible." The port is a major trade hub for steam and coking coal, automobiles and scrap metal. Many market sources are still trying to determine whether the disruption will be dramatic enough to move prices. But coal markets were already being affected today. Baltimore is home to two key coal export terminals: eastern US railroad CSX's Curtis Bay Coal Piers and coal producer Consol Energy's Consol Marine Terminal. The facilities are upstream of the bridge, meaning ships will not be able to serve them until the route reopens. The terminals handle thermal and coking coal from Northern and Central Appalachia. They have a combined export capacity of 34mn short tons (30.8mn metric tonnes). The two terminals loaded 2.4mn t of coal in February, up from 2.1mn t a year earlier, according to analytics firm Kpler, mostly exports to India and China. An India-based trader said that the suspension of coal exports will probably raise prices in India, as brick kilns enter the peak production season in the summer. Buyers could look to petroleum coke as a substitute, but the higher sulphur content may not be appealing to some users despite the higher calorific value. Prices for deliveries to northern Europe are also likely to rise given that the Netherlands, Germany and Belgium combined are the second-largest market for North Appalachian coal. April API 2 futures rose by $2/t to $113.30/t. The incident has added a "level of volatility [which] could have big implications," a European paper broker said. The lack of information has prompted some coal producers to hold off on activating force majeure clauses in their contracts. Curtis Bay is served only by CSX, while CSX and fellow eastern carrier Norfolk Southern serve Consol. CSX said it is in contact with existing coal customers and contingency plans are being implemented. The railroad at this point intends to keep Curtis Bay open but will continue to assess the circumstances moving forward. Norfolk Southern did not respond to questions. Some scheduled Baltimore coal exports may be redirected to the other three eastern US coal export terminals in Hampton Roads, Virginia, but such reroutings likely will entail increased costs. Not all coal mines will be able to shift terminals. Such decisions will depend on available capacity in Hampton Roads. Exports from the three terminals in January reached a five-year high , signaling somewhat limited capacity. Mine location and railroad access may also determine whether coal can be rerouted, an industry source said. But some producers do not have much of a choice about trying to send coal to Hampton Roads. They may need the cash so will be forced into a decision. The producers most vulnerable to delays may be Consol and Arch Resources. Arch's Leer coking coal mine may be in the best position because it co-owns Dominion Terminal Associates in Hampton Roads with Alpha Metallurgical Coal Resources. The sudden lack of export capacity could put a floor under US coal prices, which have mostly been falling since last year amid low domestic demand. The competition to replace Baltimore coal exports could prevent further cuts, another coal trading source said. Metals sources say the accident will have only isolated effects on the global ferrous scrap market, but many market participants are still assessing the situation. The port is the 10th largest ferrous scrap export port in the US, and over the last five years an average of 44,000 metric tonnes/month of ferrous scrap was exported from Baltimore, according to US Department of Commerce data. But the port closure is likely to affect other freight. Baltimore is the nation's top handler of automobile traffic. Motor vehicles and parts accounted for about 42pc of all Baltimore port imports and 27pc of all exports, according to state data. The Port of Baltimore handled 847,158 cars and light trucks in 2023. "It's too early to say what impact this incident will have on the auto business — but there will certainly be a disruption," said John Bozzella, chief executive of industry trade group Alliance for Automotive Innovation. Dry bulk freight rates likely unaffected Several sources told Argus Baltimore's closure is unlikely to have a major impact on dry freight rates despite short-term interruptions to coal transports. "We are in the shoulder months with less demand for thermal coal," a shipbroker said, suggesting mild global temperatures means the collapse "may not have too much of an impact" on freight markets overall. Vessel traffic in ports such as Charleston, South Carolina, and Savannah, Georgia, may increase on diversions from Baltimore. Kpler identified 17 vessels that will likely be impacted because they are either in the Port of Baltimore or were expected to load there in the coming days. By Abby Caplan, Gabriel Squitieri, Luis Gronda, Evan Millard and Brad MacAulay Port of Baltimore coal terminals Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Global scrap impact limited after US bridge collapse


26/03/24
News
26/03/24

Global scrap impact limited after US bridge collapse

Pittsburgh, 26 March (Argus) — The collapse of a major bridge in Baltimore, Maryland, this morning should have isolated effects on the global ferrous scrap market, but market participants are still assessing the situation. A container vessel hit the Francis Scott Key bridge, an artery for the Port of Baltimore. The bridge subsequently collapsed, blocking all vessel traffic in and out of the port and triggering major rescue and recovery efforts. The Port of Baltimore told Argus that the port is still operating and processing trucks inside its terminals but that all incoming and outgoing vessel traffic is suspended until further notice. Market participants said a resumption of activity could take up to a few weeks as rescue efforts, cleanup, investigations and draft assessments take place. As a result, it is unclear how long the port will be able to keep taking inbound truck traffic in the short-term because of space limitations. The collapse and temporary suspension of vessels so far will likely have an isolated effect on the ferrous scrap market. The Port of Baltimore is the 10th largest ferrous scrap export port in the US and over the last five years a monthly average 44,000 metric tonnes (t) of ferrous scrap were exported from the Port, according to US Department of Commerce data. In 2023, the port shipped 486,000t of ferrous scrap with bulk shipments to Turkey accounting for most of the volumes at 314,000t or 67pc of total shipments. One bulk vessel was shipped to Mexico in November. The remaining ferrous scrap exports from the port are containerized exports with south Asia the major destination. In 2023, the shipments to India represented 16pc of the volumes, while Pakistan was 6pc. There are currently no bulk vessels loading at the Port, according to Argus vessel tracking. Maryland-based Baltimore Scrap, which was acquired by global metal recycler Sims Metal in 2023 is the primary bulk exporter from the port. Smith Industries also ships bulk vessels from Sparrows Point, Maryland, which is a few miles south of the Francis Scott Key bridge. Although the global market effect is somewhat limited, market participants said that with the indefinite loss of the Francis Scott Key bridge trucking logistics moving scrap metal to the Port will be severely affected until the corridor is reestablished. Others noted congestion concerns at other major mid-Atlantic ports as inbound vessels are likely to be diverted and any inland container depot shipments scheduled to ship out of Baltimore are rerouted to other ports. This could cause congestion at surrounding ports including, but not limited to: Norfolk, Virginia; Newark, New Jersey; and Philadelphia, Pennsylvania. By Brad MacAulay Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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