Evraz’s Q1 2019 Vanadium Product Sales Fall on Weak Automotive, Steelmaking Demand

Russian steel and vanadium producer Evraz’s sales of final vanadium products fell by 5.3% quarter-on-quarter in the first quarter of 2019 to 2.52 million tonnes, the company said in a trading update on Monday April 29.This was down from 2.66 million tonnes of pure vanadium produced in the fourth quarter of 2018, and down by 19% year-on-year from the first quarter of 2018, when Evraz produced 3.11 million tonnes.

The fall in sales was mainly due to a sharp decline in demand from the automotive industry and high stock levels at steelmakers, which were accumulated during a period of sharp ferro-vanadium price increases, Evraz said.

“Lower car production and sales globally had a negative effect on demand for ferro-vanadium in the first quarter of the year,” Alexander Erenburg, the head of the vanadium division at Evraz, said during a conference call on April 29.

Weaker demand from the steel industry outside China, followed by heavy destocking at steelmakers, which was triggered by falling prices for ferro-vanadium, negatively affected first-quarter sales, Evraz added.

“Ferro-vanadium prices decreased by around $40 per tonne quarter on quarter, mostly due to the elevated price base in the fourth quarter of 2018, driven by speculations around new Chinese rebar standards,” Erenburg said.

Fastmarkets last assessed the price of ferro-vanadium, 78% min, free delivered duty-paid in Europe, at $41.50-43.00 per kg on April 26, down by 0.6% from the mid-week assessment of $41.50-43.50 per kg, itself down from from $43.50-44.50 per kg previously.

Ferro-vanadium prices have fallen by more than 60% from the all-time highs of $126-128 per kg reached last year. The price was now at its lowest level since November 2017, according to Fastmarkets’ historical data.

Ferro-vanadium prices in the Chinese and European markets both hit all-time highs last year, in part due to an expected increase in demand arising from the implementation of new rebar manufacturing standards in China, which came into effect on November 1, 2018.

But weaker-than-expected demand from steel mills in China and the increased use of ferro-niobium as a substitute for ferro-vanadium in that country have been blamed for the steep decline in the ferro-vanadium market.

Evraz now expected that “demand in the mid-term [will] improve as ferro-vanadium prices are back at reasonable level”, Erenburg said, although that will depend on further implementation of the rebar standard in China, he added.

Meanwhile, Evraz’s gross vanadium slag production increased by 1.6% to 4.5 million tonnes of pure vanadium in the first quarter of the year, up from 4.4 million tonnes in the previous quarter and up by 10.6% from 4 million tonnes from the first quarter of 2018.

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