Vanadium market

Vanadium and primary uses

Vanadium is a chemical element with symbol V and atomic number 23. It is a hard, silvery grey, ductile and malleable transition metal. The element is found only in chemically combined form in nature, but once isolated artificially, the formation of an oxide layer stabilizes the free metal somewhat against further oxidation. It is currently used mainly as an additive to steel to give greater tensile strength and corrosion resistance. Two pounds of vanadium added to a tonne of steel almost doubles its strength. It is notable for occurring in four different oxidation states which give rise to its use as a catalyst in making sulfuric acid and a major future use in vanadium redox batteries for large-scale energy storage, particularly in conjunction with solar and wind energy sources. It is increasingly used in high specification metals for aerospace and transport applications. There are many other minor applications.

Vanadium pentoxide (flake) Ammonium metavanadate (powder) Ferrovanadium 

 

Supply and demand

Currently, there are several sources of raw materials which are used in the production of vanadium. Vanadium-containing metallurgical slag is produced at steel mills in China, Russia, South Africa and New Zealand, which process titanium-magnetite ore where the primary component is iron used for steel making. This source of raw materials accounts for approximately 71% of the total world production of vanadium. In addition, small amounts of vanadium are obtained in North America from uranium ores during the production of uranium. Vanadium produced as the main product from primary ore represents 17% of the world production of vanadium. Primary ore is mainly comprised of vanadium-containing titanium-magnetite deposits in South Africa and Brazil. Secondary products such as fly ash, boiler slag, spent catalysts and other secondary materials constitute the source materials for 12% of the global production of vanadium.

Production by source Consumption by end-use
Source: TTP Squared

During the commodities boom of the 2000s, which saw prices of vanadium and iron ore increase significantly, Chinese producers instigated extensive capacity expansion projects. Chinese expansion led to record global levels of vanadium production, which peaked in 2014 and amounted to approximately 90,000 tonnes (TTP Squared data). Increased supply was mainly a result of growth in co-production at existing operations, mainly in China, but also because of ever-increasing levels of secondary production. According to TTP Squared, the total world production of vanadium in 2016 was around 73,000 tonnes. China remains the world's largest vanadium producer, which accounted for over 56% of the total production in 2016.

Global vanadium production and consumption ('000 tonnes)

Source: TTP Squared

According to TTP Squared, the total world consumption of vanadium in 2016 was around 80,000 tonnes. China is the largest vanadium consuming country in the world accounting for close to 42% of global consumption. Europe, North America, Japan and other major steel producing countries are also significant consumers of vanadium. At present, approximately 90% of vanadium consumption occurs in the steel industry. About 60% of total consumption of vanadium is in the production of high strength low alloy (HSLA) steels, and 30% in the production of special steels (high speed and tool steels, special alloy steels). About 4% of consumption occurs in the titanium alloy industry and about 3% in various chemical applications.

Pricing

Confusingly, the price of vanadium pentoxide (“pentoxide”) is usually quoted in US$/lb of pentoxide whilst the price of ferro-vanadium (accounting for the majority of vanadium production) is quoted in $/kg of contained vanadium metal (the iron content is ignored). Although there are short term variations, the prices of the two are usually in lock-step, reflecting the costs of conversion from vanadium pentoxide to ferro-vanadium.

Vanadium prices have shown a relatively high degree of volatility over the last 20 years. The industry has moved through several cycles of oversupply and undersupply that have had a dramatic and rapid effect on price movements. Because supply is inelastic in the short term, and demand is currently linked mostly to world construction, the price of vanadium can be very volatile. Demand for vanadium is rising quite strongly and supply is already less than consumption; integrated steel-vanadium co-production is relatively uneconomic compared with steel production from hematite, and all this leads to the growing gap between supply and demand which can only be met from new primary production. Vanadium has seen a rapid price recovery during 2016 after hitting its lowest point at the beginning of the year and could see a price surge in the next few years, supported by the rising interest in vanadium redox/flow batteries.

Industry outlook

The main growth in demand for vanadium is based on the practical needs of the construction industry. On July 1, 2011, the Chinese government enacted a law requiring the use of grade 3 steel, containing vanadium, in new buildings and has more recently taken steps to enforce compliance. Similar changes are expected in many other countries that do not currently use vanadium, leading to an increase in the intensity of use of vanadium in steel. The global demand for vanadium is also supported by steady demand for titanium alloys containing vanadium for use in aircraft manufacture and similar applications (vanadium is practically irreplaceable in this application area) as well as for vanadium redox batteries.

 The recent drop in steel prices as well as the long sustained period of low vanadium prices has resulted in the closure of some of the co-product vanadium producers where vanadium is produced in association with steel from magnetite iron ore. The anticipated growth in vanadium demand will therefore have to be met more from primary vanadium production companies.