New York City-based CPM Group has released its 2008 vanadium industry outlook. The report forecasts that the demand side will continue to display strength, but new supply will cause prices to moderate over the next few years, followed by a steep fall in 2011.
Among market trends, CPM identifies a greater need for vanadium-bearing steels and super alloys. Vanadium production is increasingly controlled by integrated steel conglomerates and diversified mining companies, but several new primary mine projects are forecast to come on line in countries not usually associated with vanadium mining.
South Africa, China, and Russia will expand vanadium production, with China unseating South Africa as the top producing country as electricity supply woes limit production in South Africa. Most new primary and slag supplies are expected to come on line after 2011, relieving the deficit in the market for the metal.
Vanadium demand has been increasing at a robust pace for the last five years, and CPM expects further demand growth as steel quality standards are raised in emerging economies. Most vanadium is used to alloy steel, imparting strength, toughness and wear resistance. These properties are especially important in high-strength low-alloy (HSLA) steels, which are being used more as the energy, transport, and construction industries seek to use stronger, lighter materials. Other end uses, such as aerospace, may also grow; for example, vanadium-bearing titanium alloys used in aircraft may not have any substitutes.
The price outlook for the metal is positive, remaining above historic averages, but prices should fall moderately as new supply hits the market. A narrower deficit in the next few years will help bring down prices from record levels seen in the last three years. Prices are forecast to drop steeply in 2011 as the market transitions to a surplus, possibly followed by further steady declines, but a high price environment is expected to remain in place.
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