GLOBAL VANADIUM WRAP: Chinese buyers eye arbitrage window as European, US prices consolidate

  • Thursday, August 17, 2017
  • Source:ferro-alloys.com

  • Keywords:VANADIUM
[Fellow][ferro-alloys.com] Chinese ferro-vanadium and vanadium pentoxide prices continued to rally last week, while the international markets were characterised by Chinese enquiries, consolidation of price gains and trader profit-taking.

Chinese ferro-vanadium and vanadium pentoxide prices continued to rally last week, while the international markets were characterised by Chinese enquiries, consolidation of price gains and trader profit-taking.

European, US markets continue to lag, discouraging Chinese exporters from offering

Asian buyers eye international markets to top-up stocks with "discounted" material

Speed of rally and cautious outlook delays prompt and forward buying outside China

Tight supplies fuel US prices

Metal Bulletin assessed Chinese ferro-vanadium prices at $55-60 per kg, fob, on Thursday August 3, a jump of 35.9% week-on-week.

Most sellers, however, declined to offer to any export enquiries, as spot prices in Europe remain low compared with the domestic market. 

European ferro-vanadium prices were assessed at $40-42 per kg, delivered duty-paid in Europe, on Friday August 4, up $1 per kg on the low of the midweek assessment. 

"It does not make senses to quote in the export market and we are selling well in the domestic market," a Chinese exporter source told Metal Bulletin.

Closing prices for ferro-vanadium hit 200,000 yuan ($29,718) per tonne in China last week, with offers hovering at 210,000-220,000 yuan, up by another 30,000 yuan from a week earlier, amid dwindling stocks.

"I heard some suppliers are selling material purchased years ago, as is clear from the packaging," a second exporter source said.

The ferro-vanadium rally in Europe slowed last week, with more sellers in the market.

"People are coming out and saying, 'I have some vanadium if you need it,’" a trader said.

"There has been a bit of a shake-out this week with traders taking profits, which are immense," a second trader said.

European ferro-vanadium prices have risen 39% over the past two weeks, leaving an appealing margin for those holding stocks bought ahead of the rally.

"There is some slowing down because traders are taking profits," a producer said. "This is despite a considerable arbitrage alternative of selling to China, where prices are still growing… There’s a $10/kg arbitrage if one is willing to risk it," he added.

This risk lies in the sustainability of higher prices, and the time that elapses in shipping material from Europe back to China.

"The question is, do the Chinese have the confidence in the rally to commit to the shipments?" the second trader said.

Upstream prices strengthen
After lagging behind the ferro-vanadium rally last week, European V2O5 prices were assessed at $8.50-$10.30 per lb, in-warehouse Rotterdam, up 28.8% compared with the previous assessment.

As in the ferro-vanadium market, Chinese buyers are taking advantage of the arbitrage window created by the speed of the price rally in China’s domestic market, buying V2O5 stocks from European traders to ship to China. Traders are fulfilling the enquiries with V2O5 stocks in Rotterdam warehouses, with the effect of tightening the market in Europe and setting the starting point for other enquiries in the continent.

"It’s being driven by Asia. There’s Korean interest, too – they normally buy V2O5 from China," the second trader said.

Converters in Europe, meanwhile, remain reluctant to buy spot V2O5, uncertain how long higher ferro-vanadium prices will last, while end-user demand has proved quiet, lending support to the lower end of the quotation.

"We get about five to six enquiries from China every day to sell oxide," the producer source said 

Chinese vanadium pentoxide prices rose 16.3% week-on-week, assessed in a range of $12-13 per lb, fob China, on August 3. 

The price hike remains underpinned by the low availability in supply following the shutdowns in major vanadium production hubs, such as Sichuan province, which have also supported higher prices in yuan terms.

V2O5 sales were secured in China at 190,000 yuan per tonne this week, with small deals closing at 200,000 yuan, a third exporter told Metal Bulletin.

Exporters are holding out for still higher prices, with concerns over supply disruption and replacement costs at the forefront of their minds.

"My offer will be $13 or higher as I have limited stocks and cannot secure the materials at a profitable price in the domestic market," a source in China said.

Tight supply fuels US prices
US ferro-vanadium market has soared once again amid tight supply, while the Chinese and European markets continue to set the tone.

US spot prices for ferro-vanadium climbed to an 103-month high, reaching $18-20 per lb on August 3, up 14.5% from $15.20-18 per lb previously, according to Metal Bulletin sister publication AMM’s latest assessment, with prices last residing above current levels in December 2008.

Prices have soared for three consecutive weeks, with prices now up 58% from $11.70-12.35 per lb on July 13.

Spot market activity continues to be limited amid the rocketing prices, as buyers have opted to hold off purchases if possible.

"We have seen a few buyers looking around, but most seem to be holding off if they can," a source told AMM.

"Some buyers are just feeling out the market. I guess they will eventually have to buy. I think they are waiting to see what the 'real’ price is out there," a second source told AMM.

Despite the limited activity, suppliers are continuing to increase offers in line with prices overseas, with the knowledge that supply options are limited at this time.

"No one who has actually has stock is going to be giving it away right now," a third supplier source said. "Suppliers are holding a hard line on their offers."

"The US is very tight. I think it will finally boom here," a fourth supplier source said.

 

  • [Editor:Wang Linyan]

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