"Far from being “optimistic” I think $41-42 is pretty pessimistic, actually."
You are aware that the Chinese construction market is the main catalyst for vanadium price movements? With the sector on the floor due to the property crisis, I don't see V prices recovering for years. Unless VRFB demand significantly raises the requirement for vanadium (unlikely in short term as China is the only one building batteries and they don't import), Bushveld will go bust before the V price gets anywhere close to $40.
Does an overall rising steel demand mean more or less vanadium demand?
And yes VRFB demand is rising - including in China. Even if the Chinese only use domestic vanadium for VRFB that's still demand for vanadium.
So your opinion relies on what happened last year, to just part of the Chinese economy, and not what I see is happening today and into the future, worldwide, unless you have some actual evidence to demonstrate otherwise?
It's also interesting to note in the presentation from Craig Coltman yesterday that Craig foresees a $4 per KGv reduction in cash cost. My numbers model a far more modest reduction. I also see the increase in Chinese rebar standards as hugely positive. Back in 2018 this stoked a Vanadium price rise. Could that happen again? With Vanadium content increasing costs by $2.75 - $4 per ton of Chinese steel and 2023 production of 226m tonnes that's an additional $621m - $904m in the $46bn Vanadium market, which in any case is forecast to grow to $105.4bn by 2032.
At a forecast $41.5KGv price and if cash costs reduce by $4, and production can hit 280 tonnes a month that translates to an additional $3.5m profit per year ($45.6m operating profit). Or about 20% of today's market cap.
"Far from being “optimistic” I think $41-42 is pretty pessimistic, actually."
You are aware that the Chinese construction market is the main catalyst for vanadium price movements? With the sector on the floor due to the property crisis, I don't see V prices recovering for years. Unless VRFB demand significantly raises the requirement for vanadium (unlikely in short term as China is the only one building batteries and they don't import), Bushveld will go bust before the V price gets anywhere close to $40.
Hi Pete
I think you're wrong. And here's why.
You say "....with the sector on the floor"?
Chinese property isn't the only sector for steel and vanadium.
Industrial growth in China is robust.
https://think.ing.com/articles/china-first-quarter-data-beat-forecasts-amid-uptick-in-investment
Also is the Chinese government standing idle or stimulating the property sector with Bazookas?
https://www.scmp.com/business/article/3263576/chinas-property-stimulus-bazooka-fuels-instant-rebound-sentiment-inquiries-home-sales-shanghai
Meanwhile global steel demand is actually rising in 2024 and 2025.
https://www.reuters.com/markets/commodities/global-steel-demand-rise-by-17-2024-says-world-steel-2024-04-09/
And:
https://www.fitchratings.com/research/corporate-finance/steel-demand-recovery-to-continue-in-most-markets-in-2024-excluding-china-14-12-2023
Does an overall rising steel demand mean more or less vanadium demand?
And yes VRFB demand is rising - including in China. Even if the Chinese only use domestic vanadium for VRFB that's still demand for vanadium.
So your opinion relies on what happened last year, to just part of the Chinese economy, and not what I see is happening today and into the future, worldwide, unless you have some actual evidence to demonstrate otherwise?
OB
Pete,
It's also interesting to note in the presentation from Craig Coltman yesterday that Craig foresees a $4 per KGv reduction in cash cost. My numbers model a far more modest reduction. I also see the increase in Chinese rebar standards as hugely positive. Back in 2018 this stoked a Vanadium price rise. Could that happen again? With Vanadium content increasing costs by $2.75 - $4 per ton of Chinese steel and 2023 production of 226m tonnes that's an additional $621m - $904m in the $46bn Vanadium market, which in any case is forecast to grow to $105.4bn by 2032.
At a forecast $41.5KGv price and if cash costs reduce by $4, and production can hit 280 tonnes a month that translates to an additional $3.5m profit per year ($45.6m operating profit). Or about 20% of today's market cap.
Sources:
https://www.reuters.com/markets/commodities/chinese-steel-traders-seek-delay-new-rebar-standards-2024-07-24/
https://www.mysteel.net/news/5047268-nbs-chinas-2023-rebar-output-falls-2-yoy
https://www.factmr.com/report/vanadium-market