Prices of steel ingredient vanadium have surged to nine-year highs due to China's environmental crackdown, which has led to production falling in high-polluting industries such as mining, smelting and recycling. Vanadium pentoxide touched $12.25 a lb this week, its highest since October 2008. Prices have more than doubled since January last year and are up more than 32 percent since last November.
Ferro vanadium prices are holding at their highest since October 2008 and have risen more than 42 percent since December on the spot market in Europe to $59 per kilogram. Supplies of vanadium pentoxide flakes needed to produce ferro vanadium have fallen in China due to its environmental restrictions, leading to both higher vanadium pentoxide and ferro vanadium prices, a minor metals trader in Germany said.
"On the supply side China is producing a little bit less this year," a vanadium trader in London said Chinese demand for the metal is also higher, the trader said, adding to the pressure on prices. Vanadium is used in strengthening steel and in a new generation of batteries, which advocates say has advantages over lithium for grid storage.
Shortages meant China imported more vanadium last year, particularly from Russia, the second-largest producer. Global vanadium production in 2016 stood at 76,000 tonnes, with China accounting for more than 55 percent, according to US Geological Survey data.
Traders estimate global consumption at 80,000 tonnes last year. A shift towards more vanadium being produced from ore rather than as a steel by-product while China tackles environmental regulations has also contributed to shortages.
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