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July 2017 Vanadium Shock – What and Why

What is happening ?

STOP PRESSV2O5 now reported at 12.48 USD/lb.

Last week saw almost panic like buying in the Vanadium markets – V2O5 has risen from just under 6 USD/lb to reportedly more than 11 USD/lb in China, whilst FerroVanadium has risen from around 27 USD/Kg to 50 USD/Kg in Europe.

V2O5 in USD/lb (V2O5 graphed back to 2014)

FerroVanadium in USD/Kg (FerroVanadium graphed back to 2014)

You can get a feeling for what is happening from this quote by one of the market participants: – “We quoted 180,000 yuan [per tonne] paid by cash [for ferro-vanadium 78% min] in China [on Thursday], up by 10,000 yuan from Wednesday, equivalent to $50 [per kg V] in export prices, but the price increases in Europe are too slow and if there are available cargoes at $38 [per kg V] in Europe, I am interested to import it,” – a Hubei-based producer.

Why now ?

  • Around the 20th of July it was reported that environmental shutdowns in china would impact upon some of the V2O5 processing plants in the Panzhihua area – this resulted in a jump in V2O5 prices of 7% just between the 19th and 20th of July.
  • This came hot on the heels of the surprise announcement on the 18th of July that China would be banning all imports of Vanadium Slag by the end of the year, on the basis that it is ‘a polluting solid waste’. Incidentally it was also pointed out in the China Daily that excessive discharges were being found at over 62% of the ‘waste’ processing plants visited – thus it might seem more than likely that Vanadium processing plants will suffer from extended shutdowns.

These triggers have acted on a Vanadium market that has been turning since the start of 2016. However the relatively modest price recovery since then (a 100% rise from the bottom in late 2015, but still somewhat less than the long term average of 7.40 USD/lb for V2O5)  has not changed the systemic lack of supply in the Vanadium market.

Terry Perles of TTP Squared recently reported at the Vanitec manchester meeting on the historical supply and demand situation for Vanadium – as shown below he identified clearly that demand had been running in excess of supply continuously since 2011.

Vanadium Supply and Demand since 2003 (courtesy of Terry Perles, TTP Squared, inc)

 

Importantly this has allowed the stockpiles that resulted from increased production after the 2004 and 2008 Vanadium shocks to be completed cleared. In fact the supply deficit of almost 10,000 tonnes in 2017 means that something significant must happen – prices must rise and either supply must rise or demand must be curtailed – the Vanadium market needed to rebalance, and to do that significantly higher commodity prices needed to be achieved. Evidently the dam has now broken and the Vanadium price is now increasing rapidly.

Estimated Vanadium Stockpile since 2004 (courtesy of Terry Perles, TTP squared Inc)

 

This article only conveys the personal opinion of the author. Whilst every effort is made to ensure the content is accurate, we cannot guarantee the accuracy of the data shown. This article does not constitute professional, financial or investment advice and must not be used as a basis for making investment decisions.

Site content is not authorised by the FCA and you are not safeguarded by the Investor Protection measures of the Financial Services and Markets Act 2000. See our full disclaimer

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Thank you for visiting the Bushveld Perspective, an archive of opinions from many private investors and commentators on the subject of Bushveld Minerals, which it is completely independent from.

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The content only conveys the personal opinions of our contributors. Whilst every effort is made to ensure the content is accurate, we cannot guarantee the accuracy of the data shown. Site content is not authorised by the FCA and you are not safeguarded by the Investor Protection measures of the Financial Services and Markets Act 2000.

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This article only conveys the personal opinion of the author. Whilst every effort is made to ensure the content is accurate, we cannot guarantee the accuracy of the data shown. This article does not constitute professional, financial or investment advice and must not be used as a basis for making investment decisions.

Site content is not authorised by the FCA and you are not safeguarded by the Investor Protection measures of the Financial Services and Markets Act 2000. See our full disclaimer