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General Review Of Vanadium In 2007 And Its Outlook For New Year
= Global Domination By Evraz Retreats, Vanadium Prices Fluctuate In Boxed Range
Evraz, a major steel company in Russia, attempted to set up their strategy for global domination in the market of vanadium but this matter has been braked in 2007. The European Commission ( EC ) ordered Evraz to sell the Vanadium Division of Highveld Steel & Vanadium ( Highveld ) in South Africa, which Evraz has taken over in autumn of 2006, and Evraz has agreed to this sale in August of 2007.

The sphere of influence on the vanadium market grasped by Evraz has shared more than 50% of the world production and an anxiety, which Evraz is thought to strengthen further their power to control vanadium prices, is anticipated. Therefore, EC ordered Evraz to separate the assets of Vanchem Refinery and Vanadium Mine in Highveld to the third party. The sales of these vanadium assets were initially targeted to be materialized by December of 2007 but has been postponed to the 20th January of 2008 and there is a big probability to extend a final decision of these sales to the middle of 2008. According to a view from the parties concerned, a dominant enterprise, intending to take over the Vanadium Division of Highveld, is supposed to be a Russian capital and this respect will be the reason to prolong a final decision of the sales.

For a reference, as for the Ferro-Alloy Division of Highveld, Evraz sold in the second half of 2007 (1) Transalloys ( a producer of manganese ferro-alloys ) to a Russian enterprise of Renova and (2) Rand Carbide ( a producer of ferro-silicon ) to Silicon Smelters of South Africa ( under control of Ferroatlantica in Spain ) respectively.

Even if Evraz could sell the Vanadium Division of Highveld, Evraz is in a position to sell 33.0 million lbs. per annum of vanadium slag produced at Transvaal Steel Works of Highveld, 9.0 million lbs. per annum of vanadium produced by Stratcor of the USA and 33.0 million lbs. per annum of vanadium supplied by Tulachermet Steel Works of Russia, totaling to 75.0 million lbs. per annum of vanadium ( on vanadium pentoxide base ). The world output of vanadium in 2007 is estimated at 213 million lbs., having increased by 6.5% compared to that in 2006, and Evraz has still held a power to share 35% of the whole as the largest supplier of vanadium in the world. Therefore, it is not negligible that Evraz has a power to influence on the market of vanadium.

Following the extraordinarily risen prices of vanadium products as seen in 2005, vanadium prices in the world had been stabilized in 2006 and 2007 and moved in the boxed range. The annually averaged price ( per lb. of V ) of vanadium pentoxide, as raw material for production of ferro-vanadium, in the last 3 years was <> 2005 : US$16.26, <> 2006 : US$7.86 and <> 2007 : US$7.39. Also, the quarterly moved price ( per kg. of V ) of ferro-vanadium in 2007 was <> January - March quarter : US$29.50 - 40.00 ( compared with US$37.00 - 46.00 in the same quarter of 2006 ), <> April - June quarter : US$41.00 - 37.50 ( US$36.00 - 41.00 in 2006 ), <> July - September quarter : US$36.50 - 28.50 ( US$35.00 - 40.00 in 2006 ) and <> October - December quarter : US$37.00 - 38.00 ( US$31.00 - 38.00 in 2006 ).

There is an opinion in the market that the reason, why price of ferro-vandium in the world had fluctuated without any serious fault in the boxed range of US$30 - 40 per kg. of V during a period of 2006 to 2007, was due to the strategy taken by Evraz as the largest share holder of vanadium, having aimed to stabilize vanadium prices. The matter, to which EC has attached an importance, is thought to be the leadership of vanadium prices by a giant enterprise and it seems that EC wants to avoid the soared vanadium prices as arisen in 2005.

The parties concerned have a view that, in order to prevent a fall of price for ferro-vanadium, the safety net for its price has existed. Namely, it is ferro-niobium as a rival to ferro-vanadium. Brazilian ferro-niobium has succeeded to penetrate into the market of ferro-vanadium ( particularly in China ) by means of developing amazingly the market for ferro-niobium. However, the price of Brazilian ferro-niobium sold to regular consumers in October - December quarter of 2007 had stayed on a level of US$28 per kg. of Nb. Since a leading producer of ferro-niobium abolished to publish their listed price of this ferro-alloy from 2006, price of ferro-niobium started to rise in accordance with the market principle and has doubled from a level of US$14.50 at that time.

However, steel companies of Japan calculated the comparative merits between ferro-niobium and ferro-vanadium and, according to its estimation, the merits correspond to the former of 1 against the latter of 1.5 in many cases. Therefore, when price of ferro-niobium is on a level of US$28, the case to use ferro-vanadium even at approximately US$40 will be able to see a certain merit. If price of ferro-vanadium falls to a level of US$30, a merit to use ferro-vanadium will revive and cause to rebound its price. However, reflecting the effect which a Brazilian producer has expanded in advance their capacity to produce ferro-niobium, the supply of ferro-niobium from Brazil was able to comply with the niobium demand in 2006 and 2007 but the capacity to supply ferro-niobium has reached a limitation in the second half of 2007 and, until the second half of 2008 when this Brazilian producer is scheduled to complete the structure to increase their production of ferro-niobium, the supply situation of this ferro-alloy has maintained a tightness. In addition to the supply situation of ferro-vanadium, a factor to push up price of ferro-vanadium is an aspect on supply of ferro-niobium, which is thought to be not negligible.

While new production of vanadium in Western Australia has been marked, the Windimurra vanadium project in Western Australia is expected to be resumed in the first half of 2008. The reason is the financial assistance ( to accept new shares to be issued in amount of A.$54.8 million ) by a Hong Kong based capital - Noble ( having acquired 10% of the issued shares of this project ) and Territory Resources of Australia.

For a reference, China, where is one of major countries to produce vanadium, has decided to restrict vanadium exports. The Central Government of China so far adopted the comparatively mild regulations for exports of vanadium products but has enforced from the 1st January of 2008 (1) to impose newly the duty of 5% on exports of vanadium pentoxide from China and (2) to raise the duty on exports of Chinese ferro-vandium ( including others ) from 10% as so far imposed to 20%. However, the duty on exports of ferro-vandium with 75% V content has been revised and became nil from 10% as so far imposed. China returned to the country to export again ferro-vanadium from 2006 but the exports of Chinese ferro-vanadium in 2007 decreased to half of that in 2006. A trigger for this sharp decline of the exports in 2007 was to due the prohibition of conversion trade on consignment base.

In China, Panzhihua Steel constructed one new blast furnace to increase their production of vanadium slag from 2006 and Chengde Steel is scheduled to materialize in 2008 their plan to construct one new blast furnace for production of vanadium slag. Accordingly, China is on a basic tone to increase vanadium production but busy to follow the active demand for vanadium from domestic market.