New York, April 2010

CPM Group has released its 2010 Vanadium Market Outlook. Over the 10-year projection period, strong demand and upward pressure on the cost curve are forecast to keep vanadium prices around the high levels seen over the previous decade. This is the main conclusion of the CPM Group update of its vanadium market research.

The study includes detailed historical data and analysis, as well as detailed projections for supply, demand, and prices over the next 10 years. There are statistics on vanadium production on a project-by-project and a country level, including operating costs for primary, slag, and secondary supplies. There also is a comprehensive, bottom-up analysis with projections on likely demand levels from the steel, titanium alloys, and chemical end-uses, as well as price projections through 2019. The cyclical and structural shifts in vanadium’s supply and demand fundamentals over the past decades are discussed in detail, as well as the changes expected to develop over the next 10 years. The Vanadium Market Outlook provides forecasts for supply, demand, and prices under a main scenario and two alternative scenarios.

Vanadium is used mainly as an alloy in a wide range of specialty steels and titanium alloys to provide greater strength, toughness, and wear-resistance. Vanadium supply disruptions and above-trend demand growth earlier had pushed ferrovanadium prices up roughly eight-fold from an annual average of $7.73 per kg in 2002 to $61.94 in 2008. The financial crisis and recession of 2008 and 2009 severely weakened global steel production and demand; in response to this vanadium prices fell to a monthly low of $18.96 in May 2009. Since then, ferrovanadium prices have risen to an average of $32.44, in March 2010, as global steel demand and output recovered.

The CPM Group report concludes that vanadium demand stands to benefit from the emerging recovery and restocking efforts in the steel sector. In addition to the cyclical economic shifts currently taking place, high strength, low weight metallurgical products are increasingly being demanded as development projects require superior material performance in non-ideal environments. Increased utilization of alloyed steels and titanium alloys will likely have a bullish effect on the vanadium market over the coming decade.

Supply Risks Prevalent; Higher Production Volumes Needed

Vanadium production is concentrated in three countries where supply disruptions have been regular. China, South Africa, and Russia account for roughly 90% of global supplies. CPM Group’s base case scenario suggests that vanadium producers are likely to be operating at notably higher utilization rates over the forecast period to meet demand. If producer discipline remains intact, however, new projects will be needed to meet demand over the 10-year outlook.

The Vanadium Market Outlook is part of a series of long-term studies of off-exchange alloy metals markets, encompassing 10-year projections on supply, demand, and prices, produced by CPM Group. These studies are used by producers for strategic planning and in the preparation of technical reports. In addition, institutional investors and physical traders supplement their internal research with CPM Group’s comprehensive analyses, conclusions, and projections. The reports also serves as authoritative reference guides for vanadium market statistics. CPM Group sells the reports as stand-alone products, although most clients use the CPM Group reports as parts of broader consulting packages related to the specific metals markets.

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