Coming into effect yesterday was China’s new high strength rebar standard, which is set to incorporate more vanadium in its steel rebar. In the last two years alone, vanadium price has spiked over 840% in part, because of this standard.
Making it a step that could aid worldwide vanadium consumption…
Vanadium is a transition metal that can be utilised in a range of economic purposes, such as in batteries, to make titanium, chemicals and with energy storage.
But the main purpose that you need to know when it comes to vanadium is its ability to make steel and, depending on its vanadium percentage, its ability to make rebar products stronger.
In fact, 92% of Vanadium expenditure is linked to the production of steel, a commodity that is integral to global economic growth and wellbeing. This why resource analyst Jason Stevenson beliefs the most lucrative stocks can be found in this sector, read his report here for free.
China’s new standards boosting vanadium price
China is the world’s largest consumer of vanadium, making up more than 40% of the world’s production in 2017. This number is set to grow in 2018 after the implementation of China’s new regulations, as well as this, production costs of vanadium is set to rise to $24 a tonne from its previous price of $16.
As reported by Small Caps, under China’s new standard 0.3% of Vanadium will be integrated in grade three steel, on the basis that the amount will increase with each grade to gain more than 0.1% in grade five year rebar.
John Hilbert, Chairman of Vanitec — an international trade association that represents vanadium, is calling China’s regulations a ‘positive development’ in regard to aiding Vanadium global use. He said:
‘Vanadium is the most common addition for high strength rebar, because it offers the best combination of high strength, good ductility, bendability, weldability and reduced sensitivity to strain aging.’
Meanwhile, Vanitec committee member and Australian Vanadium Ltd [ASX:AVL] managing director, Vincent Algar agreed that it was an ‘exciting’ time for the sector. He continued:
‘We see the market remaining strong for some time. Maybe not at these prices. But, if the price has been reset, maybe the low is more like US$10/lb to US$15/lb rather than US$5/lb to US$8/lb, which is what it was before.’
Demand growth expected for vanadium price
Investors can look forward to continued growth in the vanadium sector, as stated before demand is being driven by China’s high strength rebar standard. Because of this, investors should look to the iron ore sector and China’s economy as a point of reference.
There’s also further demand excitement from its key role in vanadium redox flow batteries (VRFBs). Which is promising, as in 2017 vanadium reportedly outperformed cobalt, lithium and nickel when it came to battery metals, according Bloomberg.
Pu Neng, the leading provider of vanadium flow battery technology has already invested near $90 million in VRFB systems. In November, they were granted a contract to build what will be the largest vanadium flow battery in China.
Robert Friedland, CEO of High power Exploration, of which has controlling interest in the Pu Neng, commented a policy released by China National and Reform Commission in late September:
‘[The policy] will result in vanadium flow batteries revolutionizing modern electricity grids in the way that lithium-ion batteries are enabling the global transition to electric vehicles.’
The project comes amid China’s efforts to reduce emissions and cut back coal-fired power plants in favour of more renewable energy.
Things are looking very exciting for vanadium, as according to an official from China Iron & Steel Research Institute Vanadium consumption could grow per year by 30% – that’s 10,000 tonnes a year.
For Markets & Money
PS: Aussie investors have seen great results from commodity investments, and with demand set to increase this could still continue. Markets & Money resources analyst, Jason Stevenson believes that your best opportunities lie in smaller, more speculative stocks which aren’t restricted to iron ore. The kind that could see massive share price moves from a single positive drill-hole result. For 10 of his favourite mining stocks on the Aussie market this year, download his free report ‘Top 10 Mining Stocks 2018’, today.