A Brief Update On The Vanadium Boom

Summary

  • Vanadium China spot prices rise dramatically from ~USD 20/lb to above USD 33/lb in October 2018.
  • An update on vanadium demand and supply issues.
  • An update on some vanadium miners to consider.
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This article was first published on Trend Investing on October 29, 2018, therefore all data is as of that date.

For some background on the vanadium miners, you can read:

Back when I first wrote on the vanadium boom in March 2018, the vanadium China spot price was rising and had already reached USD 14.10/lb. As you can see below, it is now more than double that at USD 33.10/lb.

Vanadium oxide spot price history

China Vanadium Pentoxide [V2O5] Flake 98% Price - USD 33.10/lb

(Source: Vanadiumprice.com)

Why vanadium spot prices have been increasing

Vanadium demand

The main reason for the China vanadium spot price increase has been the country's rule changes to strengthen steel rebar, hence requiring vanadium. The enforcement of China's new rebar standard and the central government's special action to cut down on low-quality steel comes into effect next month (November), which should further support the vanadium market. The second, and much smaller, factor is the new vanadium demand for vanadium redox flow batteries (VRFBs). So essentially, the vanadium market is experiencing a strong demand pull.

(Source: Australian Vanadium presentation)

Vanadium supply

From a supply point of view, it is important to note that most vanadium is produced as a by-product of steel slag. This can often be more costly, and has the side effect of pollution, hence China has been trying to cut back steel production. Vanadium 2018 projected cash costs from steelmaking slag range from USD 3.23/lb to USD 9.47/lb.

(Source: Largo Resources investor presentation)

New supply from existing producers is constrained, and new supply

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Disclosure: I am/we are long SYRAH RESOURCES [ASX:SYR], TRITON MINERALS [ASX:TON], NEOMETALS [ASX:NMT], LARGO RESOURCES [TSX:LGO], TECHNOLOGY METALS AUSTRALIA [ASX:TMT], AUSTRALIAN VANADIUM [ASX:AVL]. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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