Chinese Vanadium Exports Tumble in H1 vs Last Year; Ferro-Niobium Imports Soar on Rebar Demand

China exported 2,807 tonne of ferro-vanadium (basis 75% vanadium) in the first half of 2019, a drop of 17.9% from 3,419 tonnes over the same period in 2018, according to official but unconfirmed data seen by Fastmarkets.

The pronounced year-on-year dip in the export of ferro-vanadium was mainly due to a higher Chinese price compared with its European counterpart for most of the first half of the year, which dampened Chinese exporters’ interest in shipping their cargoes abroad.

The ferro-vanadium, 78% V min, fob China price averaged $56.80 per kg in the first half of 2019, compared with an average of $56.20 per kg for ferro-vanadium basis 78% V min, 1st grade, ddp, Western Europe, according to Fastmarkets’ historical price data. The price of the former averaged $64.30 per kg over the same period of 2018 in comparison with the latter’s average of $65.60 per kg.

Fastmarkets’ latest assessment for ferro-vanadium, 78% V min, fob China is $40-42 per kg as of Thursday August 8, while Fastmarkets most recently assessed the price of ferro-vanadium basis 78% V min, 1st grade, ddp, Western Europe at $31-32.15 per kg on Friday.

“When the domestic price is obviously higher than the overseas one, it’s unsurprising to see exporters prefer to sell domestically,” a Chinese market participant said. “Because that not only saves them considerable time and effort but also leaves them larger room for profits.”

A comparatively steady increase in demand from downstream consumers partly contributed to the Chinese price surpassing the overseas price, market sources said.

China’s rebar production totaled 118.76 million tonnes in the first six months of the year, an increase of 19.3% year on year, according to data from the country’s National Bureau of Statistics (NBS).

In June, Chinese ferro-vanadium exports totaled 430 tonnes, a drop of 25.7% from 579 tonnes last June despite an increase of 13.8% from 378 tonnes in May.

Ferro-niobium imports hit historical high
Despite the eye-catching increase in downstream demand, China’s vanadium prices have been on a general downward trajectory in the first half of this year, partly because many Chinese steel mills have switched ferro-niobium as feedstock due to its price competitiveness relative to vanadium products.

China’s imports of ferro-niobium have soared by 86.9% year on year to 26,550 tonnes in the first half of 2019, from 14,204 tonnes in the corresponding period of 2018.

“Mills are quite cost sensitive especially when their profit margins have been greatly squeezed by rising raw material prices so far this year. Even when the vanadium products have become cheaper than ferro-niobium since May, [steel mills] cannot completely depend on vanadium products,” a second Chinese market source said. “The lesson they drew from last year is too ‘impactful’.”

The Chinese ferro-vanadium price hit a record high of $130-140 per kg in October 2018 on expectations that demand would significantly increase due to a new rebar policy that came into effect on November 1, 2018. The policy required rebar produced in China to meet a certain tensile strength, leading market participants to expect steel mills to increase ferro-vanadium content in their production.

The price surge put great pressure on Chinese mills at that time, market sources said. In light of the higher vanadium prices witnessed in October and November due to an expected surge in demand for the material, Chinese mills increasingly turned to more cost-effective alternatives.

The significant volume of ferro-niobium imports in the first half of 2019 partly accounted for the substantial drop in vanadium prices over the same period.

Fastmarkets’ ferro-vanadium, 78% V min, fob China export price fell by 48.4% in the first half of 2019 to $34.50-37 per kg on June 27 from $68.50-70 per kg on January 3.

In June, China imported 3,931 tonnes of ferro-niobium, up by 135% from 1,671 tonnes last June. This June’s volume was down by 13.5% from 4,547 tonnes a month earlier.

V2O5 exports slide 
Upstream, China exported 2,780 tonnes of vanadium pentoxide (V2O5) in the first half of the year, falling by 27% from 3,808 tonnes over the same period of last year.

Similarly, the evident year-on-year drop in these exports was in part a result of Chinese exporters’ reluctance to sell abroad due to the domestic price’s being higher than in Europe.

The average price of vanadium pentoxide 98% V2O5 min, fob China was $12.60 per lb in the six-month period while the price of vanadium pentoxide 98% V2O5 min, in-whs Rotterdam averaged $12.40 per lb in the same period. This compares with an average fob China price of $14.30 per lb in January-June 2018 and $14.50 per lb in-whs Rotterdam.

Fastmarkets’ vanadium pentoxide 98% V2O5 min, fob China price stood at $8.40-9.70 per lb on Thursday while the latest assessment for vanadium pentoxide 98% V2O5 min, in-whs Rotterdam was $7-7.50 per lb on Friday. 

Chinese exports of V2O5 in June came to 399 tonnes, down by 51.5% from 822 tonnes last June. Shipments rose by 53% from 260 tonnes in May.