Date: Oct 16, 2018

While not as exciting as the transformation in the auto market with the shift to electric vehicles, demand growth from batteries used for renewable energy storage has the potential to have a bigger impact on mining.

One of the prime technologies that could grab market share from lithium ion for large scale storage systems is so-called vanadium redox flow cells.

The rally in vanadium prices is only accelerating with vanadium pentoxide (V2O5) flake used in energy storage systems leaping to $27.50 a pound in China putting it within shouting distance of the all-time high reached in 2005. V2O5 is up more than 550% since September 2016.

Vanadium pentoxide is only a fraction of the overall market and the raw material is primarily used to strengthen steel (today it makes up more than 90% of the market). Ferro vanadium prices jumped 10% just over the past week also hitting a 13-year high to $118 a tonne in Europe. In 2005 vanadium prices briefly peaked at $120 a tonne.

While the long term story for vanadium may be the battery sector, China’s introduction of new rebar standards next month is creating tightness in the market right now.

In a research note BMO Capital Markets, an investment bank, says it anticipates that that Chinese ferrovanadium exports will dwindle over the coming year as domestic demand for the rebar industry continues to rise:

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