Global Vanadium Consumption

Having falls by over 11000t between 2007 and 2009, global  vanadium consumptionincreased sharply in 2010, reaching a record high of 61,000tV. Thelarge fall in consumption in 2008 and 2009 was primarily due to the  global recession, which saw demand for all commodities, particularly steel, the largest consuming end-use for vanadium contract sharply.

Approximately 90% of vanadium was consumed as ferro vanadium in tech production of steel. About 5% of vanadium consumption was used in the production of aluminum master alloys which were used in the production of titanium alloys.

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The intensity of use of vanadium in Chinese steel was much less than half the intensity of use in Europe and North American in 2010.

Vanadium is also used in other applications with its use inbatteries gaining interest. At present, vanadium consumption in redoxbatteries is limited, as VRP’s are yet to gain wide-spread commercialapplication. However, the market for VRB’s is expected to grow stronglyin the coming years.

The need to diversify the world’s energy consumption, to morerenewable sources should see rising demand for VRB’s for energy storage.The latest forecast suggests that the use of renewable energies,particularly solar power will rise, as the world increases itsdiversification of power supply, and oil prices rise as new discoveriesbecome limited and costly.

Production

World vanadium production in 2010 was estimated to have been 62,000tV contained in finished products.

In 2010, world production increased by 14%, having fallen by 10% in2009 due to the global recession. Prior to the onset of the globalrecession, world vanadium output had increased strongly. For the period2000 to 2007, global production had risen by an annual average rate of4.8%.

vanadium production at the global level is dominated by a smallnumber of producing countries. In 2010, three countries, China, SouthAfrica and Russia accounted for almost 90% of total vanadium output,with China alone accounting for almost 50% of  total output.

Market Outlook

At present, steel production is the largest end=use for vanadium.Consumption is estimated to be over 90% of total vanadium consumption,and as a result, steel production drives consumption of vanadium.

Given the close relationship between the vanadium and steel markets,the outlook for steel production has a large bearing on the outlook forthe vanadium market.Steel output fell by 8% in 2009 due to the global recession, beforeincreasing by 16% in 2010, as the recovery began. The most dominantaspect of the steel market is currently Chinese domestic production,which in 2010 accounted for 44% of total world production. Chineseoutput of  crude steelproduction is forecast to rise by around 7% per year for the period2010 to 2019, compared to total world growth of around 5.5% per year.

Apart from market deflects during the period 2003 to 2005, thevanadium market has on the whole been well supplied, and following therecession, a surplus was observed in 2010.

Overall, Roskill forecast world vanadium supply to grow at a slightlyslower rate than demand. World demand in forecast to grow at an annualaverage rate of 6.1% for the period 2010 to 2019, compared to supplygrowth of 5.9% over the same period.

The outlook for vanadium prices is on the whole positive, with prices expected to follow an upward trend throughout the  forecast period. In 2009 prices fell sharply, as the global recession saw demand for all commodities fall. Prices for both vanadium pentoxide and ferrovanadium fell by 50% in 2009, having almost doubled in 2008. In 2010, prices averaged US$6.87/lb for pentoxide and US$30/kg for ferrovanadium.

In 2012, the global vanadium market is estimated to have a surpluswhich will start to reduce in size over the next few years. Prices in2014 are forecast to reach US$10/lb for pentoxide and US $45/kg for ferrovanadium,as the market prepares for a potential deflect in 2015. Although pricesare forecast to increase rapidly, Roskill expects prices to remainbelow the record highs seen in 2005. In real US$2010 terms, vanadiumprices throughout the forecast period are expected to remain below thoseseen in 2005. However, any issues which stop or delay vanadium reaching the market could see a deflect caused, causing prices to spike.

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