Vanadium Market Update: H1 2019 in Review

After experiencing one of its best years to date in 2018, prices of both vanadium pentoxide (V205) and ferro vanadium have fallen dramatically.

Weakened demand, failure to enforce new rebar standards in China and economic uncertainty have all weighed on the price of the specialty battery metal.

Ferro vanadium hit its year-to-date high on December 5, 2018, when it reached US$126.50 per kilogram. V205 also reached its highest point of US$28.80 per pound around the same time.

Both have steadily slipped from those highs in the months since. Currently, the price of ferro is US$36.70 and V205 is US$8.10.

The vast majority of produced vanadium is used in China for steel applications, more specifically the high-strength low-alloy metal used to make construction rebar. This end use was part of the reason behind vanadium’s sharp price growth in 2018.

The Chinese government implemented new, stricter rebar standards at the end of 2018, prompting smelters to stockpile vanadium for future use, which helped to drive the price higher.

While vanadium has long been used as an alloy material for steel manufacturing, the real potential the metal hold is in its energy storage capabilities in vanadium-redox flow batteries (VRFBs).

According to the International Renewable Energy Association, “VRFBs already offer some of the lowest system costs among battery technologies and are expected to decrease in cost by 66 percent through to 2030, which is faster than any other technology in energy storage.”

VRFBs are designed for large-scale energy storage, such as power grids and charging stations.

Market watcher Andrew O’Donnell, managing director of Supercharged Stocks, thinks there is no cause for concern with the current price depreciation.

“I’m not that concerned about the price. I think it’s somewhere around US$8 right now, which is not ideal necessarily, it’s a bit too low,” said O’Donnell. “I think ideally around US$12 would be great because it’s good for actual miners and, of course, that is a good price as well to continue developing the redox battery. So, you don’t want it too high because if it’s too high then the batteries are too expensive, (and) too low, of course, is not good.”

O’Donnell had expected vanadium to perform slightly better following the rare earth news in late March.

“I was a little bit surprised that it didn’t react with the rare earth story — rare earth did explode — but for whatever reason, vanadium didn’t get carried along with it. I think people focused solely on the trade war idea and picked up on the rare earth story rather quickly,” he said.

Vanadium market update: By the quarter

With prices starting the year at an all-time high, there was renewed interest in ramping up production and exploration. Leading the charge was US-based uranium producer Energy Fuels (TSX:EFR,NYSE:UUUU).

Vanadium is a by-product of uranium mining, in addition to other metal and energy extraction.

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