Vanadium is mainly consumed by the steel industry. China is both the biggest producing country and the largest consumer of Vanadium. With 54% of global steel production China is also the biggest steel producing country in the world. China steel mills are known for their cheap substandard rebar products. In 2018 stricter standards for high-strength rebar in China led to a 10% Vanadium deficit and caused V2O5 prices to skyrocket from ~US$5/lb to ~US$28/lb within a year. However the lack of inspections and relax enforcement measures have allowed unqualified steel to continue unchecked in recent years. This factor coupled with the current construction / real estate crisis in China have led Vanadium supply to exceed demand despite the increase in Vanadium consumption in the energy sector since the last 3 years, thus causing V2O5 prices to drop back down to the current level.
For me the key point to take away from the above is the fact that a small 10% V shortage can cause V2O5 prices to jump almost 6 times. So imagine: If the VRFB growth turned out as (or even half as) predicted by the experts / consulting firms, how extreme would the V deficit be? If so, when would the impact on V2O5 prices start to be felt? in 2025? Or how much later?
It would be really great to see V2O5 at double digits in 2025.
However, here are my concerns:
1) Is there a risk that the commercialisation of VRFBs fails to materialise as forecasted (a possible downside stated by Bushveld Minerals, a primary producer of V).
2) China’s VRFB market is expected to grow at 30-50% per annum through 2030. Most of Chinese V production comes from stone coal or as a steel by-product thus sub-standard not good enough for electrolyte. Largo and Bushveld are 2 primary producers of electrolyte-ready Vanadium. Largo is vastly undervalued with a market cap of US$89.67M and Bushveld’s market cap is £26.24M (US$32.7M). If her 5-year plan projected a massive VRFB growth, would China not want to control a large production of electrolyte-ready V? What is the chance of China doing it via V price and/or stock price manipulation to “take over” Largo and Bushveld Minerals for a song at the expense of their shareholders?
DYODD