| Vanadium’s journey in 2019 was quite different from 2018, a year that saw interest in the space and prices soar to levels not seen in a decade. But in the past 12 months, prices have declined quicker than market watchers expected, although many continue to bet on the battery metal‘s long-term fundamentals due to its energy storage potential. As the year comes to an end, what can investors expect in 2020? Read on to learn more about vanadium’s performance in 2019, as well as what analysts and market watchers had to say about the space and the vanadium outlook for next year. Vanadium trends 2019: The rollercoaster year Vanadium was one of the best-performing battery metals of 2018, but following that stellar year, prices for both vanadium pentoxide (V2O5) and ferrovanadium fell dramatically in 2019. “We expected prices to fall, but not so quickly,” Roskill Director Jack Bedder said. “We also expected a similar market balance to that which we see today.” However, he added, both demand, because of strong rebar output, and supply, because of higher-than-expected production from Chinese slag producers, were higher than anticipated. Weakened demand, failure to enforce new rebar standards in China and economic uncertainty have all weighed on prices for the specialty battery metal. Most vanadium output is used in China for steel applications, particularly in the high-strength, low-alloy steel used to make construction rebar. According to Roskill, China’s new rebar standards, which set up stricter strength criteria from November 2018 onwards, were expected to trigger a big increase in vanadium demand, with more steelmakers using vanadium micro-alloying. “The implementation of the new regulation was slower than expected,” Roskill Director Jack Bedder said. “Most of China’s large mills were already complying with the new standards prior to November 2018, while smaller mills have been slower to act, benefiting probably from a tolerance period.” Similarly, SP Angel Analyst John Meyer explained that the new Chinese regulations require substantially more vanadium in the steel, which was expected to drive demand higher. “Unfortunately, higher vanadium prices, poor compliance in China and substitution with niobium caused demand to fall, with vanadium prices pulling back to US$27.5 (per kilogram) in China and US$20.25 in Western Europe,” he said. Despite this, vanadium demand benefited from China’s record rebar output, which was 20 percent higher from Q1 to Q3 2019 than in 2018, driven by buoyant construction and infrastructure sectors. “Roskill expects a softer H2 due to seasonality and a weaker economy,” Bedder said. “But this was good news for vanadium demand.” Another factor impacting vanadium demand was higher niobium substitution than expected. |