Chinese vanadium prices are likely to fall in 2021 because of increased spot availability, low-priced imports and slow demand from rebar producers on expectations of a weaker performance in the steel and real estate industries.
Availability is rising because of higher domestic production, lower exports and increased imports. The country's output capacity has risen to 182,000 t/yr of vanadium pentoxide (V2O5) equivalent, up from 144,000 t/yr in 2019.
China is expected to produce 135,000t of V2O5 equivalent this year, up by 7.48pc on 2019 and 49.17pc on 2018, as plants continue to ramp up after new rebar standards were introduced in November 2018.
The largest vanadium producer, state-owned Panzhihua Iron and Steel (Pangang), which has a capacity of 40,000 t/yr, is expected to produce 42,000t of V2O5 equivalent this year, up by 2.4pc on 2019. Chengde Iron and Steel, a subsidiary of China's largest steelmaker, Hebei Iron and Steel, is expected to produce 18,600t, up by 16.3pc.
Sichuan Chuanwei is expected to produce 12,000t, up by 9.1pc. And Sichuan Desheng and Yunnan Desheng are expected to produce a combined 12,700t, up by 5.8pc. Supplier Chengde Jianlong and Heilongjiang Jianlong are expected to produce a combined 16,000t, up by 6.7pc.
Exports down, imports up
Chinese exports of 80pc ferro-vanadium fell by 19.9pc on the year to 3,460t in January-October, the lowest for the period since 2010.
The country exported 398t of vanadium-nitrogen alloy in January-October, down by 17pc on the year and the lowest for the period since 2014. And China exported 3,827t of 98pc pentoxide flake, down by 11.1pc on the year and the lowest for the period since 2010.
China imported 2,878t of 80pc ferro-vanadium in January-October, up by 2,357t on the year. Imports of vanadium-nitrogen alloy totalled 693t, up from just 89t a year earlier. And imports of 98pc pentoxide flake reached 6,811t, up from 628t.
Chinese suppliers have reduced exports and consumers have increased imports of vanadium products this year as domestic prices are at premium.
The average 2020 export price for 80pc ferro-vanadium was $28.20/kg fob China on 1 December — against $24.80/kg for European 78-82pc ferro-vanadium duty paid Rotterdam. And the average export price for 98pc pentoxide flake has risen to $6.50/lb this year, against the European duty unpaid price of $5.80/lb.
In China, 2020's average price for 50pc ferro-vanadium was 101,126 yuan/t ($46.10/kg) on 1 December, down by 38.1pc on the year. Prices for 98pc pentoxide flake feedstock were at an average of Yn96,422/t, down by 37.86pc on the year.
Lower demand reflects reduced purchases from steelmakers because of narrower profit margins. Chinese steel mills will continue to reduce purchases of ferro-vanadium and vanadium-nitrogen alloy in 2021 to save production costs in the face of lower sales prices for steel products and surplus supplies.
