European Ferro-Vanadium Prices Extend Rally Amid Trader Restocking, Nearby Availability Concerns
Ferro-vanadium prices rose by more than 7% in Europe during the first half of this week, with traders reporting low warehouse inventories and potential interference to China’s ability to plug the gap should the coronavirus outbreak create logistical delays.
Fastmarkets’ benchmark price assessment for ferro-vanadium basis 78% V min, 1st grade, ddp Western Europe rose to $27.50-29.50 per kg on Wednesday January 29, up by $1.50-2.35 per kg from $26-27.15 per kg on January 24.
“Vanadium is on fire again,” a producer source said.
Traders have continued to restock into the rally, with offers reported in excess of $30 per kg come Wednesday.
So far it has been another quiet week for consumer buying, with end-user business reported at the lower end of Fastmarkets’ range.
“Consumers are still reluctant, and now it’s possible there could be some profit-taking. Not everyone is going to wait for the next $1-2 on the upside,” one trading source said.
Ferro-vanadium prices are now as much as 34.4% higher than at the start of the month, according to Fastmarkets data.
Consumer demand improved earlier in January, and with the fourth quarter’s year-end destocking having subsided, traders have been buoyed to restock in the expectation that the market is now better underpinned.
The potential for logistical delays created by the coronavirus outbreak in China is an “add-on” to this month’s run on the upside, a second trader added.
Inventories in Europe are understood to be low, and for much of the past year, the domestic ferro-vanadium market in China has been trading at a premium to prevailing European prices. As a result, there has been little incentive for the Chinese to ship to overseas customers, though the latest rally in Europe brings the two markets roughly to parity.
Fastmarkets’ price assessment for ferro-vanadium, 78% V min, fob China stands at $27-29 per kg as of January 23, where it has been since mid-December 2019.
European buyers are now concerned, however, that the outbreak of the coronavirus will delay their ability to restock with material from China in the near term.
“We will have to evaluate it next week, but China has not been exporting, which has left the trade without much stock,” a distributor source said.
China’s national holidays for the Lunar New Year have already been extended until at least February 3 in an attempt to contain the spread of the virus. Market participants are awaiting updates that could indicate longer-than-scheduled closures at ports and customs, which would spell delays for exports, or delayed restarts at ferro-vanadium converters.
“It will be a different situation, of course, if the rally gets backed up by [disruption caused by] coronavirus,” the first trader said.
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