A sustained fall in demand and reduced tender prices paid by steel mills coupled with lower prices for pentoxide flake feedstock may pressure China's ferro-vanadium prices in the coming days, according to market participants.

Argus assessed prices for 50pc grade alloy at 80,000-83,000 yuan/t ex-works, or Yn160-166/kg ($22.25-23.08/kg) for contained vanadium on 9 June, the lowest level since 24 February, down by 3.6pc from the mid-point of Yn83,000-86,000/t ex-works on 20 May.

Prices for 50pc grade alloy have been on a downward trajectory since 20 May as most alloy producers have continued to make price concessions on expectations of a further fall in demand and lower tender prices from steel producers.

Production in China's steel reinforcement bar (rebar) sector — the country's largest vanadium consumer — was 65.4mn t in January-April, down by 0.9pc compared with the same period in 2024, according to data from the National Bureau of Statistics. More rebar producers have applied the so-called controlled-rolling and controlled-cooling process to cope with thinner profit margins, which can reduce or even eliminate the need to add vanadium alloys to produce high-strength rebar, market participants told to Argus.

Alloy tender prices from steel mills have continued to decline since late May because of narrower profit margins in the steel industry. Tender prices from steelmakers fell to Yn81,000-84,000/t on a delivered basis and paid by acceptance bill with value-added tax (VAT) on 9 June, down by 2.9pc from the mid-point of Yn84,000-86,000/t delivered including VAT and payable by acceptance bill on 20 May.

State-owned steel producer Baowu Echeng Iron and Steel on 6 June bought 20t of the alloy at Yn81,800/t on a delivered basis and paid by acceptance bill with VAT, with shipments due on 20 June, down by Yn4,700/t from Yn86,500/t in a tender it issued on 8 April.

Private-sector steel producer Henan Fengbao Special Steel on 4 June bought 15t of 50pc grade alloy at Yn82,300/t on a delivered basis and paid by cash with VAT, down by Yn1,200/t from Yn83,500/t in a tender it issued on 21 May.

Pentoxide flake prices fall

Flake supplies exceeded demand after output from major flake producers Heilongjiang Jianlong Special Steel, Chengde Jianlong Special Steel and Chengde Iron and Steel recovered to normal levels in May.

And capacity increases at some firms also boosted supply. State-owned steel producer Jiuquan Iron and Steel launched a vanadium slag facility with an annual capacity of 3,000t of vanadium pentoxide (V2O5) equivalent in 2025. Private-sector steel producer Sichuan Dazhou Steel increased its annual slag capacity to 12,000t of V2O5 equivalent this year from 8,000t in 2024 after its relocation of overall integrated steel facilities and the installation of a converter specially designated for vanadium extraction.

Most alloy producers only restocked flake on a hand-to-mouth basis considering slow demand and lower bids from steel mills, as some mills are set to undergo equipment maintenance in July-August because of reduced stocks and negative profit margins.

Prices for 98pc grade pentoxide flake fell to Yn72,000-73,000/t ex-works on 9 June, the lowest level since 10 February, down by 5.6pc from the mid-point of Yn75,500-78,000/t ex-works on 21 May when prices began a downtrend, in response to a fall in buying interest and bid prices from alloy smelters caused by lower tender prices from steel producers.

Small-sized flake suppliers started to sell flake at Yn72,000/t ex-works paid by cash on 9 June as they were bearish about short-term market outlook, expecting major flake suppliers Sichuan Chuanwei, Sichuan Desheng and Chengde Jianlong to cut their offers for June delivery to regular consumers in the coming weeks, a Liaoning-based alloy smelter told Argus.

Most market participants expect prices to extend losses next week after steel mills complete their tender purchases for June delivery.