Vanadium outlook 2022 The following INN article was dated Dec 21 2021. This is a repost.
Vanadium outlook 2022: What’s ahead next year
As 2022 kicks off, global demand for vanadium is expected to grow.
“There is limited demand downside, as either growth is expected to slow (steel, chemicals) or increase in pace (aerospace, batteries) as all main demand categories are poised for some growth,” Willis Thomas of CRU Group said.
Looking specifically at the steel sector, CRU is expecting demand in China to be flat, with firm intensity and slightly lower steel production figures — down 10 million tonnes, or 0.89 percent. The rest of the world is expected to see a slight rise in steel volumes with intensity remaining flat.
“For the aerospace/titanium segment, aircraft inventory is moving again and the supply chain is starting to pull in more vanadium,” Thomas said, adding that CRU is looking for demand increases for 2022 over 2021 figures. “This sector is lagging from pandemic recovery by about one year to 18 months.”
Another segment that continues to grab attention from investors is the battery space, as vanadium is a key metal used in vanadium redox batteries.
In 2022, CRU expects demand for batteries to be up significantly in China and moderately in the rest of the world. Meanwhile, chemicals demand growth will lessen with slower industrial production growth in 2022 over 2021.
Moving onto the supply side of the picture, the main challenge ahead for vanadium production could be finding more low-cost production to avoid future demand destruction, the CRU analyst said.
“As the market expands production to cover growing demand (especially from batteries) we begin to move to the far end of the cost curve — this means the price must go higher.” Thomas said. “Demand destruction is real in steel and batteries at high prices, and a quick increase in demand can easily drive prices higher as new marginal producers step in to fill the supply gap.”
When asked about how he expects prices to perform in the new year, Thomas said low availability and threats to supply that support the price currently will be met with good demand in the first quarter of the year, a time when vanadium prices are historically elevated.
“Demand will drive prices in the second half of the year,” he said. “A swift battery demand increase will push prices back to where they were mid-2021 or higher — without these anticipated demand increases, prices for the highly by-product vanadium could easily fall.”
Thomas added that a key factor investors should keep an eye out for is battery electrolyte capacity.
“Significant battery-related vanadium is planned to be consumed in 2022,” Thomas said. “The issue will be producing enough electrolyte to satisfy all of this demand.”