Japanese steelmakers were not impacted by the global shortage of ferrovanadium as they relied on local supplies, and importers were protected by contracts, mill sources said Friday.
Sources at two integrated steelmakers, which consume 20-100 mt/month of ferrovanadium each for rebars, auto parts and other applications, said that supply from their local suppliers -- Taiyo Koko and JFE Materials -- had been sufficient and they did not need to import.
Their consumption was in line with the forecast volume as well, the mill sources said.
"Our producer recycles vanadium catalyst used at local oil refineries, and there is no need to import vanadium pentoxide feedstock either," a mill source said.
Demand for ferrovanadium surged in the last six months on the back of China requiring the use of high-strength rebar in new buildings and infrastructure from this month. Orders for vanadium-contained steel from nuclear power plants and Southeast Asian countries that are prone to earthquakes were on the rise too, a South Korean trader said.
As a result, ferrovanadium prices doubled this year. S&P Global Platts assessed European weekly spot ferrovanadium at $113-$117/kg delivered, duty-paid Northwest Europe, on November 1, more than double from $47-$52/kg on January 4, and the highest since May 12, 2005. Platts does not assess ferrovanadium in Asia.
Supplies of feedstock vanadium pentoxide was tighter, sources said.
"We want to produce more ferrovanadium than ferromolybdenum, but there is no spot feedstock," a source at a South Korean ferroalloy maker said. A Hong Kong-based trader said he had not traded any vanadium products at all since April, due to a shortage.
Japan's annual ferrovanadium production is roughly 2,000-4,000 mt/year, and it imports 3,000-4,000 mt/year to meet its total demand of around 8,000 mt/year.
Sources at Japanese electric arc furnace steelmakers, who rely on imports from China and Russia, said they had not been affected by tightness of supply as they have annual term contracts. In negotiating 2019 contracts, producers assured them supply would be guaranteed, a mill source said.
"We are currently negotiating the April 2019-March 2020 contract," a source who imported three or four containers a month said. "We are aware supplies are tight and prices are going up. Our volume for 2019 will not change from 2018 and there is no reduction in our volume. But prices will rise," he said.
Two Japanese traders said that some 2019 contracts with Japanese mills had been settled at the monthly average of a published price index minus a discount of 1-3%. The 2018 discount rate was in a range of 1-5%, a Japanese trader said.
In Japan, a steelmaker with an electric arc furnace and which makes construction steel, awarded a buy tender for 5 mt at $110-$115/kg delivered, a Japanese trader said.
A South Korean trader reported bids at $116/kg CIF by two prospective buyers in Southeast Asia, seeking 10 mt each. His counter offer was $120/kg CIF. Several traders said that domestic prices in China were $135-$140/kg. The spot supply was either of Chinese, Russian or South Korean origin, sources said.
