Hotter than Hell – Vanadium.
Vanadium prices are soaring in China and also in Europe. In the past month alone the Chinese vanadium spot price has risen from US$20/lb to US$33/lb. The strong vanadium demand in China, in anticipation of the new rebar regulation coming into force in November this year, is accelerating the recent price increase.
Stockpiling by Chinese’s domestic consumers and rebar mills are also contributing to the transaction price increases. Another factor that pushed vanadium prices to new highs is low inventories. There is also concern about the ongoing supply/demand squeeze with no easing of the situation in the near future.
Exporters are now preferring to sell in their domestic market owing to a more favorable market price as the overseas market lags behind. Vanadium is mostly produced as a by-product of steel making, hence a slowdown in the steel making industry can slow vanadium production.
Global vanadium production may struggle to meet forecast rising strong demand
Bulk buyers began long term contract negotiations earlier this year to make sure they can secure volumes for 2019. This is happening before we have even considered vanadium’s use outside of the traditional steel hardening industry, as that alone can make up more than 90% of the market.
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This could change as vanadium pentoxide (V2O5) makes its way into the vanadium redox flow battery market (VRFB) creating even more demand. Vanadium flow batteries are ideal for the massive energy storage industry as they have life-spans exceeding 20 years without capacity loss. They are also non-flammable and operate under any temperature. There is a distinct advantage over lithium ion batteries as this type of battery can be charged and discharged simultaneously, making it highly suitable for large-scale storage from renewable sources, such as solar and wind when connected to an electricity grid. Redox Flow Batteries were initially developed by NASA in the 70’s for its space program. The expiry of a number of patents related to RFBs in 2006 has sparked an industrial race to commercialization, which is forecast to grow to become a $4.5B market by 2028.
Although lithium–ion batteries are forecast to dominate the electric vehicle revolution, the VRFB will have a winning place in large scale energy storage. There’s a revolution coming in vanadium redox flow batteries, focusing on large scale energy storage systems.
Vanadium has remained under the radar for investors for years, but it’s not a new miracle metal as Henry Ford used it to harden steel for his cars way back in the day. Even if vanadium is never used in EVs the demand will continue to increase alongside the global need for mass energy storage, and the increased needs for steel hardening in a country such as China with its enforcement of the new rebar standard.
Even though vanadium is silvery grey its uses in the renewable energy storage industry truly makes it green. Vanadium should continue to do well long term, even if we see some short term pull backs.
Matthew Bohlsen holds a Graduate Diploma in Applied Finance and Investment (similar to CFA), and a Graduate Diploma in Financial Planning. He has 30 years ... <Read more about Matthew Bohlsen>