Wednesday's announcement mentioned "Terry Perles –world renowned...

Wednesday's announcement mentioned "Terry Perles –world renowned vanadium industry expert joins team" which is a positive:

Perles' MoTiV Metals secures vanadium marketing deals

April 19, 2012 - 11:36 GMT Location: London

MoTiV Metals, a new marketing firm set up by former Evraz East Metals director Terry Perles, has secured marketing agreements with vanadium producers including Atlantic's Windimurra plant.

MoTiV was formed in December 2010 and is based in Pittsburgh, USA. It has an exclusive agreement to sell Windimurra material in the USA and Central and South America under an agreement with Hong Kong-based Element Commodities, which has an offtake agreement with Atlantic Ltd.

Terry Perles, president of consultancy firm TTP Squared, talks to Metal Bulletin about the outlook for vanadium and what factors will support higher prices from 2012 onwards.

Metal Bulletin: How would you describe the outlook for ferro-vanadium in 2012-13, and what are the positive factors?

Terry Perles: There are three variables that will affect vanadium demand growth in the next several years:

1) the growth in global steel production
2) growth in specific vanadium consumption rates (kilogrammes of vanadium per metric ton of steel produced) and
3) growth in titanium alloy production.

1) Today, about 93% of global vanadium consumption is in the steel industry, so growth in global steel production is a primary driver in vanadium demand growth. Sources project global steel production to grow by a compound annual growth rate [CAGR] of 5-7% in the next several years.

2) The specific vanadium consumption rate will continue to increase as a result of growing pressure and economic incentives associated with the substitution of high-strength, low-alloy [HSLA] steels for lower strength carbon-manganese steels. The use of HSLA steel represents the most efficient solution to meeting the world's growing demand for steel while minimising the negative effects of growing steel production, including raw material depletion, energy and water consumption, pollution generation and capital deployment in steelmaking capacity. The replacement of carbon-manganese steel with HSLA steels containing vanadium, niobium, titanium or some combination of these three elements offers value through the entire supply chain. Steel producers can sell higher margin, value-added products; steel consumers can reduce total steel costs by consuming significantly lower quantities of steel; and minimisation of raw material and energy consumption, pollution generation and capital invested in steelmaking capacity brings corollary benefits to all. From 2007 to 2011, specific vanadium consumption rates increased by a CAGR of around 10% per year, and the forces at hand will continue to drive strong growth in specific vanadium consumption in the next few years.

3) The upward trend in titanium alloy production. The workhorse titanium alloy used in aerospace applications contains 4% vanadium. Growing production of new, titanium-intensive passenger jets over the next few years is expected to result in a doubling of titanium alloy production. Today, titanium alloys consume about 4% of the global vanadium production, or about 3,000 tonnes of vanadium per year, and this figure is expected to double over the next four years. Vanadium supply growth is restricted by availability of vanadium-bearing raw materials.

There is some evidence that energy-storage applications for vanadium are beginning to mature to the point of becoming important in terms of vanadium consumption. This factor - combined with the continuing replacement of grade 2 rebar (containing no vanadium) with grade 3 rebar (containing on average 0.025% vanadium) in China - is a reason to believe that vanadium demand may surge in the next few years.