July 17, 2009

Encouraging developments in vanadium markets

Leading metals markets information aggregator, Ryans Notes, reported this week that "Rising FeV (ferrovanadium) prices within China have put a damper on China’s FeV exports. In the first five months of the year, China exported 864 mt of FeV compared to 2,634 mt in the same period of 2008. Domestic prices for FeV are $30.20-31.20 per kg compared to $29-29.60 at the start of the month. China’s vanadium pentoxide exports in the first five months of the year sank to 1,461 mt from 7,912 mt in the year-ago period. China’s imports of pentoxide, meanwhile, rose to 180 mt from South Africa in May compared to almost no imports in the first four months of the year."

In May 2009, Reed Resources released the results of its two-year, $15m Definitive Feasibility Study (DFS) into the production of vanadium from its Barrambie Vanadium Project in which it forecast EBITDA of A$105m p.a. at a FeV price of US$30/kg and A$300m p.a. at a FeV price of US$50/kg. FeV was trading below US$20/kg when Reed released these results. However, the FeV price has been rising steadily since. The FeV price was trading over US$90/kg at one point in 2008.

In other news, an article in The Australian reported that Japanese steel mills were moving to reopen one of two steel furnaces that were shut down in February as a result of collapsing steel demand and that "Japan's Ministry of Economy, Trade and Industry (has reported ) that steel demand will rise by 12 per cent over the July-September quarter and that crude steel output will increase by 14 per cent."

Finally, in even more good news for vanadium suppliers, in a presentation given at a ferro-alloys conference in Hong Kong in March 2009, Robert Bunting of Stratcor suggested that "if China's use of vanadium per ton of steel matched that of the rest of the world, the vanadium market would expand dramatically".