The chinese have abolished export rebates on a range of metals and ferroalloys including vanadium. There are now disincentives for chinese domestic producers to export vanadium. The way forward for the traders is to procure and market vanadium from outside.
The chengde deal is the only real way of selling titanomagnetite iron ore to china - the chengde works have direct access to coastal facilities. Also, chengde and one or two others are the only steelmakers capable of utilizing titanomagnetite in a blast furnace.
Conventional blast furnaces cannot handle titaniferous ores - it blocks them up in no time.
The balla balla titanomagnetite iron ore is about 50% Fe in the ground, and can provide a concentrate of about 60% Fe, with low impurities. Compared with domestic chinese iron ore sources that are barely 30% Fe, you can understand why the chengde steelworks are attracted to balla balla.
The balla balla concentrates contain more than 1% V2O5, so you can expect that chengde would extract the vanadium via steelmaking. For this reason, one could expect a premium rather than a discount for the balla balla ore - more than just a cost covering exercise.
Two million tonnes of exported concentrates would contain about 11,000 tonnes of vanadium, in addition to the 4,500 tonnes produced on site. So axo will be the dominant force in vanadium supply. That's it, game over and all other suppliers should be very nervous.
AXO Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
