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Largo Inc T.LGO

Alternate Symbol(s):  LGO

Largo Inc. is a Canada-based producer and supplier of vanadium products. The Company’s segments include sales & trading, mine properties, corporate, exploration and evaluation properties (E&E properties), Largo Clean Energy and Largo Physical Vanadium. Its VPURE and VPURE+ products, which are sourced from one of the vanadium deposits at the Company's Maracas Menchen Mine in Brazil. The Company is also focused on the advancement of renewable energy storage solutions through Largo Clean Energy and its vanadium redox flow battery technology (VRFB). The Company is also engaged in the process of implementing a titanium dioxide pigment plant using feedstock sourced from its existing operations, in addition to advancing its United States-based clean energy division with its VCHARGE vanadium batteries. VPURE+ Flakes are used in the production of master alloys, where it provides high strength-to-weight ratios for the titanium alloy and aerospace industries.


TSX:LGO - Post by User

Comment by st_estebanon Jan 24, 2021 7:45pm
260 Views
Post# 32372134

RE:V2O5 Price Discrepancy Between Chinese and European Markets

RE:V2O5 Price Discrepancy Between Chinese and European Markets I'll take a guess.

I do not think the quality of Chinese vs European Vanadium is a factor.  There are specifications that are the same regardless of the market...

Before getting into any details we might have to specify what is the price difference that we are talking about?

The Vanadium market (1.1ktonne a year??) is small compared with that of the major metals.  I think that most of this volume is negotiated by producers/consumers on a yearly basis and you have multiple factors impacting the price like quantity, when/where it needs to be delivered?  any special clauses in relation to major changes in the spot price, etc....I do not think that there is a major difference in the net price that a producer will receive by selling in Europe or China.  the key here is net price.  Prices in China might be higher but the net price could be lower since costs for transportation, import taxes, etc could be higher than to make the same sale in Europe.

The second part of this relates to difference in the spot market and related arbitration.  Here the number of factors is bigger.  You have the basic factors lke import taxes and cost of transportation.  You also have timing factors (if the price is higher in China today in relation to Europe will you be able to make a sale and make the delivery?  is the buyer willing to wait? - Part of the sales strategy from Largo was to distribute some of the production to the different key warehouses.  I think this tries to address the timing/location issue. 

The size of the market could be another factor - China produces and consumes more than 50% of the world's Vanadium.  Changes in demand on either direction on the Chinese market will have a bigger impact on prices and this will first be seen in the chinese market itself.....

In terms of arbitration, I think it is taking place on a daily basis but there are limitations to it.  Largo selling to China last year to take advantage of the prices in china is an eample of it.  In terms of limitations, this is a market where physical goods are exchanged and arbitration does not occur instantly.  If it was a virtual market, like stocks or bitcoin :) it will be different.

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