Metal Bulletin 1st Feb 2008
Ferro-vanadium soared to its highest level since September 2005 on Friday as supply concerns from South Africa and China continued plaguing the market.Ferro-vanadium basis 70-80 percent rose to trade between $54 and $62 per kg on Friday, compared with $46-49 previously, as market participants reported prices had raced as much as $5 higher on Friday morning alone.
“These are certainly interesting times – people are asking for March delivery and I don’t know where to put the price. Will it be at $60 or $70 or even $80 by then?...It’s like playing pin the tail on the donkey,” one market participant told MB.
On Wednesday, most deals were concluded around $47-$48 per kg, but tightening supply in China and a constant stream of bullish supply side news from Eskom in South Africa sparked a flurry of business and pushed offer prices over $60 by Friday, traders told MB.
“At the pace it’s going I wouldn’t be at all surprised to see it at over $60 by the end of next week,” one trader told MB.
Chinese producers are not selling into Europe until after the New Year holiday and European and South African producers are sold out, market participants told MB. Supply in warehouses is also thin, they said.
Several small Chinese producers shut last week on a lack of raw materials ahead of the holidays after poor weather held up raw materials deliveries to the plants, market participants said.
“I need to spend all my time looking for ferro-vanadium at the moment,” said a second trader.
South African supply concerns are also dogging the market after both Highveld and Xstrata Alloys said their production could be affected by Eskom limiting power to its industrial customers to 90 percent.
Xstrata has declared force majeure to its customers as a precautionary measure, it said on Friday, while Highveld confirmed on Thursday that its operations would be running at a reduced load from the end of the week (MB Jan 31).
Vanadium pentoxide (V2O5) is also scarce in Europe, market participants told MB, adding that they are expecting no material from China until after the new year holiday and that they expect prices to breach $10 per lb in the next week.
