Posted on 20 Aug 2020
Chinese prices of vanadium nitride (VN) will likely hover at current levels for the rest of this year, given that production of VN will probably outstrip demand from domestic carbon steel mills, Mysteel suggests from the results of its latest survey released on August 18. Increased supplies of vanadium pentoxide (V2O5), the raw material for VN, could see the makers beefing up output, reducing the likelihood of any uptick in prices.
As of August 17, China’s national price of VN was at Yuan 167,500/tonne ($24,170/t) and including 13% VAT, higher by 1.5% on month, but down by 12.8% on year, according to Mysteel’s assessment. Most VN made in China is sold in lump form.
The current price of the compound was higher than the average price of Yuan 154,583/t over this year’s January-July period, Mysteel’s data showed, The recovery was mainly due to most domestic VN smelters firming their offer prices to offset their high costs, and because domestic steelmakers had generally accepted the slightly higher prices, given their robust steel production and improved steel prices, Mysteel Global noted.
According to Mysteel’s survey of 25 independent steelmakers who do not produce their own vanadium-related raw materials, 64% of the steelmakers anticipated that the VN price would fluctuate at a relatively high level of Yuan 160,000-166,000/t including the VAT for the remainder of 2020. The 25 account for over 50% of the country’s annual consumption of VN.
The sampled mills thought that demand for VN will stay high, considering that steel production is both smooth and at a high level, the survey responses showed. However, the surveyed mills said they would refuse to accept higher offer prices from the VN producers because they are familiar with the raw material costs of VN and they doubt that the raw mats prices will rise further.
On the other hand, the other 34% of the steelmakers quizzed in the survey believed that prices of V2O5 would dip under the weight of the higher volumes of imports over the past few months. These respondents argued that the increased supplies would cause VN prices to drop accordingly.
Over January-June, China imported 2,139 tonnes of V2O5, in sharp contrast to the only 21 tonnes for the first half of 2019, according to the latest available data from the country's General Administration of Customs. Among the total, the import volume for June alone hit the year’s high at 779 tonnes – as against not a single tonne in June 2019.
The price of V2O5 in Southeast China’s Sichuan province was at Yuan 105,000/t including the VAT on August 17, unchanged from the level on June 19, according to Mysteel’s assessment.
Thus, Chinese steel mills have greater pricing leverage regarding VN, because the increased availability of V2O5 could very easily push VN production into oversupply, Mysteel’s survey noted.
Besides, the survey also found that trends of production and prices of VN are in line with those of steel, which indicated that the VN smelters are highly reliant on the demand from mills.
For example, over January-July China’s crude steel output rose by 2.8% on year to 593 million tonnes, while for July alone, steel output topped 93.4 million tonnes, up 9.1% on year and 2% higher on month, according to data from the country’s National Bureau of Statistics (NBS).
Meanwhile, during this year’s January-July period domestic output VN reached 34,865 tonnes, higher by a sizzling 28.7% on year, and last month, production climbed by 6.9% on year to 5,460 tonnes, according to Mysteel’s survey of VN producers hosting over 95% of domestic capacity of the compound.
Written by Zhiyao Li, lizy@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com
Source:Mysteel Global
