China's vanadium supply is expected to fall in 2025, given expected suspensions or output cuts and rising demand from the steel and vanadium redox flow battery (VRFBs) industries, Argus spoke to Yang Xiongfei, deputy general manager of Pangang Group Chengdu Vanadium and Titanium.

Could you forecast production and demand changes for this year's global vanadium market?

The world's vanadium production is expected to fall by 4,500t from 2023 to 233,700t of vanadium pentoxide (V2O5) equivalent this year. China's output fell by 2,700t from 2023 to 159,700t this year, accounting for 68.3pc share in the global market.

Global vanadium consumption is expected to rise to 206,600t of V2O5 equivalent in 2024, up by 2,900t from 2023, based on industry data. China's consumption is projected to rise by 3,300t from last year to 118,000t in 2024. Consumption outside China is likely to dip by 400t to 88,600t.

Global consumption from the steel sector is expected to drop to 161,560t of V2O5 equivalent this year from 166,540t in 2023. Consumption outside China is likely to fall to 71,960t in 2024 from 74,140t in 2023.

The world's consumption from the VRFB, chemical catalysts and titanium alloy sectors is expected to rise to 20,940t, 10,140t and 13,960t this year, up by 47pc, 3.5pc and 6.1pc from 14,200t, 9,800t and 13,160t, respectively, in 2023.

China is the largest country in terms of vanadium supply and demand. Could you give production predictions for feedstock sources in China for 2024?

More than 86pc of China's vanadium production comes from vanadium slag, followed by primary ores, including stone coal, at around 6.4pc. Other feedstock sources include secondary resources such as spent catalysts and by-products from alumina and titanium dioxide production.

China's vanadium production is expected to reach 159,700t of V2O5 equivalent this year, comprising 137,400t of output from vanadium slag extraction and 10,200t from stone coal, with the remainder from secondary resources.

Output from vanadium slag extraction is projected to increase by 3,500t this year from 2023 as some slag producers, including state-controlled Chengde Iron and Steel (Chenggang) and private-sector Sichuan Desheng Group, have increased vanadium slag production. But private-owned steelmaker Yuxi Yukun Iron and Steel has kept its vanadium operations suspended from the second half of this year owing to lower-than-expected vanadium prices.

What are your demand forecasts by downstream sectors in China for 2024?

China's vanadium consumption in the steel sector is expected to fall by 2,800t to 89,600t this year because of reduced production for steel reinforcement bar (rebar). The country's rebar production stood at 145mn t over January-September, down by 15.7pc on the year.

VRFB has become a key demand driver for vanadium these days. Based on industry data, around 2.6-3.0GWh of new VRFB devices will be deployed in China this year, up sharply from around 0.26GWh in 2023. This will push vanadium consumption from the VRFB market up to 21,000-24,000t this year, from 2,100t in 2023.

The significant reduction in rebar output has weighed on vanadium-nitrogen alloy consumption. But new rebar standards and China's economic incentives, including equipment trade-in upgrades, will boost vanadium consumption.

What are your expectations for vanadium consumption in the steel industry and in other application fields in 2025?

Global steel demand will decrease by 0.9pc on the year to 1.751bn t this year, followed by a rebound of 1.2pc to 1.772bn t in 2025. China's steel demand will drop by 3pc in 2024 and by another 1pc in 2025, owing to an ongoing slowdown in China's real estate market.

China is expected to consume 38,260t of ferro-vanadium this year, up by 3,770t from 2023, given large-scale equipment trade-in upgrades and higher output in some manufacturing sectors like automotive, shipbuilding and machinery building. The country is expected to consume 37,730t of vanadium-nitrogen this year, down by 9.6pc from 2023, owing to the rebar output cuts.

China's average vanadium consumption in the rebar market stood at 213kg of vanadium metal equivalent in every tonne of rebar production as of September, up by 16.4pc from 183kg during January-August and 184kg in 2023, because of the country's mandatory GB 1499.2 standards for rebar, effective from 25 September. The revised rebar standards will encourage more use of vanadium, particularly vanadium-nitrogen. I predict a compound annual growth of over 13,000 t of vanadium-nitrogen consumption in the coming years, based on the 2023 rebar output.

The Chinese government is likely to take more measures to boost its real economy on a larger scale, and this may boost China's steel demand in 2025. Rising exports and falling imports are also likely to increase domestic demand.

China is expected to consume 135,400 -145,400t of V2O5 equivalent in 2025. Vanadium demand from the steel industry is expected to be between 95,500t and 105,500t in 2025, if the country's rebar output falls by 12pc or 5pc in 2025 from 2024. This will highly depend on house construction and real economic development. Vanadium demand from the steel industry has the potential to increase further if rebar production in 2025 remains the same as 2024.

Demand from the VRFB industry in 2025 will be more significant, as the country is expected to consume 30,000t V2O5 equivalent of more vanadium in 2025 from this sector, based on the number of VRFB projects currently being planned or under construction.

What is your forecast for China's vanadium output in 2025? Do you think the oversupply will ease?

China's vanadium output in 2025 is forecast to decline slightly by 2,000-3,000t of V2O5 equivalent compared with 2024. Vanadium output from slag extraction will remain largely unchanged.

Jiuquan Iron and Steel is set to launch vanadium slag operation in 2025 with an annual capacity of 3,000t V2O5 equivalent. Sichuan Dazhou Steel is expected to increase its slag output in 2025 after installing a convertor, especially for vanadium-extraction.

Yuxi Yukun Iron and Steel, with an annual capacity of around 10,000t V2O5 equivalent, is likely to extend its suspension from the second half of this year in 2025 because of lower-than-expected vanadium prices. Output from stone coal and secondary resources is also expected to decline in 2025 owing to the same reason.

Overall, we expect China's vanadium output to decrease slightly, but demand is likely to increase by 17,400-27,400t of V2O5 equivalent in 2025. The ease in oversupply will benefit the vanadium market and prices.