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Vanadium Market Update: H1 2021 in Review

What happened in the vanadium space in H1 2021? Here’s an overview of the main factors that impacted supply, demand and prices.
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This article was originally published by Investing News Network

Click here to read the previous vanadium market update. 

After a year of uncertainty, experts were expecting a demand recovery for the vanadium market in 2021, as economies recovered from the coronavirus pandemic.

Most vanadium output is used in China, for steel applications, particularly the high-strength, low-alloy steel used to make construction rebar.

With the first half of the year now over, the Investing News Network (INN) caught up with analysts, economists and experts alike to find out what’s ahead for vanadium supply, demand and prices.

 

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Vanadium market update: Price performance

Last year, the vanadium market had to navigate the uncertainty brought by the coronavirus to every sector of the economy. That’s why at the end of 2020, all eyes were on the potential recovery of the economy as a main catalyst of what could happen in the vanadium space.

Speaking with INN, Erik Sardain of Roskill said he was expecting prices to recover in the first half of 2021.

He pointed to what happened in 2020, when vanadium demand saw a slight increase. According to Roskill data, China saw a 7 percent year-on-year increase in demand from the steel sector, while the rest of the world saw an 8 percent decline.

“This has been a really wide divergence,” Sardain said, adding that steel still accounts for more than 90 percent of vanadium consumption. “So basically, you have a very similar picture for vanadium, very strong demand in China and very weak in the rest of the world.”

By the end of the year, the rest of the world started to show some recovery, in anticipation of economies reopening, vaccination plans and the expectations of a post-COVID world.

“I was expecting the recovery to be more straight over 2021 and 2022, and it appears that 2021 has been stronger than I thought,” Sardain said. “But that’s because the market expectations of a recovery were stronger than I anticipated.”

Commenting on how prices performed during the first months of the year, Willis Thomas of CRU Group told INN prices came on quite strongly in the second quarter of 2021.

“The pandemic recovery in the world ex. China drove new demand growth, while Chinese demand remained strong,” he said.

Vanadium market update: Supply and demand

As mentioned above, the steel sector continues to be the main driver of vanadium. Throughout the first half, demand from the rest of the world continued to catch up with China.

Sardain explained that one of the reasons demand lagged behind in the rest of the world is because those economies are more exposed to the aerospace and chemical industries.

“China is really more infrastructure, construction and rebar, and especially with vanadium,” he said. “But in the rest of the world, you see that the aerospace industry has been really badly hit in 2020. This is going to recover in 2021.”

 

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The Roskill analyst is expecting the build out of inventories in the rest of the world excluding China to continue, and demand from the steel sector to remain strong throughout the second half.

“China is also expected to have strong steel production throughout 2021, although from a very low base in 2020,” he said. “Overall, I think on the fundamental basis, yes, the domestic demand in China will be quite strong in terms of steel.”

The exports market has seen growth in the first half of the year, however Sardain is expecting it to slow down in H2.

CRU is expecting China’s demand from steel in the second half of 2021 to be slightly below 546 Mt of demand compared to H1, with 532 Mt crude steel to be produced in the last six months of the year. For the rest of the world excluding China, the market is expected to remain balanced at around 441 Mt for both H1 and H2 2021.

Looking over to the battery segment, demand increased, which was “not hard to do” after a slow year last year, according to Thomas.

“More announcements and conversations are happening, so yes more demand is expected,” Thomas said. “Green stimulus and infrastructure spending will support grid scale energy storage development — sometimes tangentially, sometimes directly.”

For Sardain, the battery segment should see some recovery in 2021 as 2020 saw very low numbers.

“There have been some announced projects, but are they going to materialize to translate into vanadium demand?” he said. “We’re talking about something that should be tangible by the end of the decade.”

China will be the main driver of the battery segment, according to Sardain, who also believes the battery demand for vanadium will have a gradual pace over the next few years.

Looking over to supply, in 2021, there will likely be some increases coming from Chinese producers.

“Supply might be a little bit constrained this year,” Sardain said. “If demand is stronger, because the recovery is taking place faster than expected, and steel production is going higher, we could see the market remaining tight or even tighter in the second part of the year.”

Thomas agreed, saying supply gains in the short term are mostly confined to China, where capacity at both stone coal mines which remain idled, or any spare capacity at basic oxygen furnaces, will be utilized to find market balance.

“Also, end-of-the-cost-curve players will supply vanadium opportunistically,” Thomas said.

Vanadium is needed both for steel inputs such as ferrovanadium as well as in a fast growing array of niche value chains for non-steel alloying uses.

“These mostly involve the need for higher grade/purity oxides as well as other vanadium chemicals – things not as commonly produced from basic oxygen furnace slag or in direct reduction of spent catalysts,” Thomas explained.

 

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For Thomas, one of the biggest challenges faced by junior miners in the vanadium space is finding ways to maximize profits with higher prices while they last.

“Longer term, the challenge of setting strategic balance between thriving existing markets for steel inputs and fast expanding energy related demand will be key to success,” he said.

Meanwhile, Sardain said 2021 is looking to be a good year for miners.

“However, miners face the challenge of making sure that they can run their operations as much as they can to be able to satisfy a growing demand,” he said.

Vanadium market update: A look ahead

Looking at what could happen in the second half of the year, Thomas said it is hard to know when the vanadium price is running up how much it has left in the tank.

“Typically, we see lower prices in the second half of the year than the first,” he said.

The first half of the year includes the pre-Chinese New Year stocking period in January and the run up to construction season in China in the Spring.

“However, as steel demand remains strong and supply remains tight, there is little expectation of sharply lower prices for the rest of 2021,” he said, adding that price volatility is likely to stick around.

For Sardain, prices are expected to remain at current levels in the second half of the year. The expert is forecasting European vanadium pentoxide to average U$8.1 per pound.

In terms of factors to watch in the second half of the year, Thomas said any tariff or non-tariff barrier on vanadium will be key, but the Section 232 final decision – long overdue – is an important one.

Investors should also keep an eye on how China’s steel production finishes out the year; the final details of the infrastructure bill in the US; and the grid-scale energy storage projects as potential catalysts for the sector, the expert added.

For his part, Sardain said supply could remain constrained depending on how demand performs for the rest of 2021.

“If the recovery worldwide accelerates, that could translate into positive market sentiment for vanadium,” he said. “On the other hand, if COVID restrictions return, maybe the market will see a slowdown.”

Don’t forget to follow us @INN_Resource for real-time updates!

Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.

 

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The post Vanadium Market Update: H1 2021 in Review appeared first on Investing News Network.

Energy & Critical Metals

Daimler Truck’s powertrain plants in Germany will produce electric drive components

Following intensive talks, Daimler Truck AG and the Works Council have agreed that the three powertrain sites in Gaggenau, Kassel and Mannheim will specialize…

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Following intensive talks, Daimler Truck AG and the Works Council have agreed that the three powertrain sites in Gaggenau, Kassel and Mannheim will specialize in different components for electrified drives.

In the future, they will drive the global production of battery-electric and hydrogen-based drive systems in a production and technology network for electric drive components and battery systems, together with the sister plant in Detroit. Significant additional investments in future technologies at the Daimler Truck powertrain plants will drive technological change.


  • The Mercedes-Benz plant in Gaggenau, which specializes in heavy-duty commercial vehicle transmissions, will develop into a competence center for electric drive components as well as the assembly of hydrogen-based fuel cell drive components.

  • The Mercedes-Benz plant in Kassel is expanding its current focus on commercial vehicle axles and will become a competence centre for electric drive systems.

  • The Mercedes-Benz plant in Mannheim, specialized in commercial verhicle engines, is drawing on the more than 25 years of experience of the Competence Center for Emission-free Mobility (KEM) located at the plant and is focusing on battery technologies and high-voltage-systems.

Important scopes for alternative drives, such as the production of electrically driven axle systems, e-motors and inverters, as well as the assembly of fuel cell systems, will be integrated into the powertrain plants in the future, in addition to investments in the reprocessing and recycling of battery systems.

Our industry is undergoing a transformation toward CO2-neutral trucks. Since conventional drive systems will also be with us for some years to come, we are focusing the future orientation of our powertrain plants primarily on flexibility, cost-effectiveness and very well-trained employees. This had to be reconciled in our negotiations with the Works Council. With the production and technology network for electric drive components and battery systems in conjunction with the competence centers at the plants, we have succeeded in doing so. In this way, we are creating optimum conditions for maximum competitiveness for our plants and at the same time laying the foundations for a successful future.

—Yaris Pürsün, Head of Global Powertrain Operations Daimler Truck

Another element of the technology network for electric drive components and battery systems are the innovation laboratories (InnoLabs). In addition to the competence centers, these are being set up at all plants. They specialize in innovative production processes, new technologies and products.

The aim of the InnoLabs is to close the gap between prototype production and series development. Series start-ups are thus to be prepared with maximum efficiency so that products can be transferred from the prototype phase to series production as quickly as possible. With the InnoLab Battery located at the Mercedes-Benz plant in Mannheim, Daimler Truck AG will establish its own pilot battery cell production and thus lay an important foundation stone for future competence in battery technology.

In its transformation toward CO2-neutral transportation, Daimler Truck is focusing on two all-electric drive technologies: battery and hydrogen-based fuel cell. With these, every customer application can be covered with full flexibility in terms of routes—from well-plannable, urban distribution transport to multi-day transports that are difficult to plan. Which solution is used by the customer depends on the specific application.

As the first battery-electric truck, the Mercedes-Benz eActros for routes in distribution transport will go into series production at the Mercedes-Benz plant in Wörth in October 2021, followed by the eEconic next year. The battery-electric eActros LongHaul for long-distance transport will follow from the middle of the decade. Key components be manufactured at the powertrain plants in the future.

In addition to the products, the powertrain plants are to become CO2-neutral from 2022, just like all other European Daimler Truck plants. This will be made possible, among other things, by a green power concept at Daimler: CO2-free power procurement from renewable energy sources will form the basis for CO2-neutral production. As part of this, the sites will purchase electricity from wind and solar farms as well as hydropower plants from 2022 onwards. On the way to becoming green production sites, the Mercedes-Benz powertrain plants are also to operate CO2-free in the long term by successively establishing fully renewable energy systems over the next few years.

The sister plant in Detroit, which is part of the global production network for powertrain components, will continue to strengthen its role in the US market and, as a competence center for electric powertrain components, make an important contribution to shaping sustainable transportation in the American market.

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Energy & Critical Metals

Tata Steel contracts for 27 electric trucks for transportation of finished steel in India

As part of its sustainability initiative, Tata Steel is partnering with an Indian start-up to deploy electric trucks for its steel transportin India. This…

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As part of its sustainability initiative, Tata Steel is partnering with an Indian start-up to deploy electric trucks for its steel transportin India. This marks the first use of EVs by any steel producer in the country for transportation of finished steel.


The electric trucks feature a 230.4 kWh Lithium-ion battery pack with a cooling system and a battery management system giving it capability to operate at ambient temperatures upto 60 °C (140 °F). The battery pack will be powered by a 160-kWh charger setup which would be able to charge the battery from 0 to 100% in 90 min. With zero tail-pipe emission, each electric vehicle would reduce the GHG footprint by more than 125 tCO2e every year.

Tata Steel has contracted for 27 EVs, each with a carrying capacity 35 tonnes of steel (minimum capacity). The company plans to deploy 15 EVs at its Jamshedpur plant and 12 EVs at its Sahibabad plant. The first set of EVs for Tata Steel are being put in operation between Tata Steel BSL’s Sahibabad Plant and Pilkhuwa Stockyard in Uttar Pradesh.

At a virtual ceremony organized on July 29, Tata Steel formally flagged-off the loaded vehicle at the Pilkhuwa Stockyard to move to the Sahibabad plant, 38 km away.

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Energy & Critical Metals

Tesla Is Hiking Prices In The U.S. While Slashing Them In China

Tesla Is Hiking Prices In The U.S. While Slashing Them In China

After posting its most recent earnings "beat", Tesla is taking on two starkly…

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Tesla Is Hiking Prices In The U.S. While Slashing Them In China

After posting its most recent earnings "beat", Tesla is taking on two starkly different strategies for its U.S. and its China business. 

In the United States, the automaker is raising prices in an attempt to boost profit margins, while in China it is keeping prices steady in what is likely an attempt to drum up more demand, Reuters reported

So far, Tesla has raised the price of its Model 3 and Model Y "about a dozen times" in the U.S. this year, the report notes. At the same time, the company also introduced an affordable version of its Model Y in China.

Tesla isn't just facing increased scrutiny in China from its citizens and the government, but is also running face-first into a wall of Chinese EV competitors. 

Toni Sacconaghi of Bernstein has questioned demand in China as a result of the introduction of the lower priced Model Y. He has said that the model "may make sustained margin improvement difficult". Chinese owners were "were less enthusiastic and had lower repurchase intentions than owners in the United States and Europe," a Bernstein survey recently showed.

Meanwhile in the U.S., Tesla continues to raise the price of its Model Y long range, which is now priced at $53,990. In China, the more affordable Model Y is priced at $42,394.

Roth Capital Partners analyst Craig Irwin told Reuters: "I think Tesla is looking to be as competitive as it can be in China. Lower prices will be a part of that aggressive market positioning. There is a very large difference in battery prices in the U.S. and China, as well as local vehicle manufacturing costs."

Hargreaves Lansdown analyst Nicholas Hyett added: "It wasn't so long ago that the group was trimming prices in the U.S. to gain scale and maximize profitability, and it feels like we're now seeing that in China too."

Gene Munster at Loup Ventures attests that the lower prices in China could "have a lasting effect" for the company in the country: "Teslas are on average 3x the cost of a typical EV made in China so they have to be priced less than the U.S. to compete. Prices of Teslas in China will be below (the) rest of the world for the next decade."

Tesla's market share in China has fallen to 11% in the battery electric vehicle market. China makes up 44% of the global EV market. 

 

 

 

Tyler Durden Fri, 07/30/2021 - 10:36
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