London (UK) - Ferrovanadium prices continued to spike higher in Europe this week on the back of reduced availability of material from the three main supplying regions -- South Africa, China and Russia.
"I have never seen such low stocks in vanadium. There will be a gap of about six weeks in supply both from China and South Africa," said one trader.
"Most of the long-term contracts will be served but for non-contractual demand there is no material," he added.
Spot sales of ferrovanadium were reported up to the $89/kg level, while one trader reported receiving offers as high as $92/kg.
"Next week could be $100. The week after that ... the moon," the first trader said.
The Platts European 80% ferrovanadium price was set at $80-90/kg Thursday, up from $50-52/kg the previous week.
As for vanadium pentoxide, prices are largely nominal given a lack of offers, traders said.
"Theoretically the price should be at about $15-16/lb, but there's none to sell," the trader said.
A second trader agreed: "The price was $12.50-13.00/lb ex-China last time we booked, but now they won't ship until the second half of March or April."
Ferrovanadium prices had been largely static, hovering just below the $40/kg for the second half of 2007, and had started to inch up in January before being spurred higher primarily by news of power disruptions in South Africa.
"It was already a tight market, the South Africa story just threw it over the cliff," the second trader said.
South African vanadium and ferrochrome producer Xstrata Alloys declared force majeure to its customers as a precautionary measure in the light of reduced electricity supply to its ferrochrome and vanadium operations from power utility Eskom as part of a national energy shortage in South Africa, the company said last week.
On January 25, the company said it had reduced load across the Xstrata-Merafe Chrome Venture ferrochrome furnaces and its vanadium and platinum operations until further notice from Eskom.
Despite the dramatic rise in prices, consumers are still being forced to come into the market, traders said.
"Vanadium is a low cost value for steel mills," the second trader said. "It's non-strategic for the steel guys, so no-one's holding any stocks."
In the short term the prognosis is for even higher prices, traders suggested, but they warned that recent history shows that vanadium prices can head south equally dramatically.
"It can come down faster still. It won't touch the sides," said a third trader. "The moment it turns, not a kilo will be sold until it touches the bottom."
The previous price spike in ferrovanadium saw the Platts European 80% price rise from $50-52/kg in January 2005 to $125-135/kg by April of that year, only to slump to $37-40/kg by August.
"You don't want to be holding material when the music stops," the third trader said.
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