Commodity prices boosted by tumbling dollar
• The falling dollar and hopes of a further boost to the global economy drove continue to drive commodity prices higher, sending the Bloomberg Commodity index to a 2 year high and extending gains seen since mid-December to >10%.
• US Treasury secretary said that weaker dollar was ‘good for trade’ and added to bullish sentiment in raw materials, sending gold, oil and metals to multiyear highs
• Industrial metals gained ground, with the London Metal exchange index of six metals rising 2.5% to a new five-year high

Vanadium price rise makes vanadium the best performing battery metal
New demand to come through from new China 100MW (500MWh) vanadium redox battery instillation
Vanadium price US$59.75/kgV vs ~US$25.25/kgV yoy
• The irony about vanadium is that its performance is not down to new demand for vanadium redox batteries just yet.
• Vanadium demand has grown through the better application of rules in China specifying how much vanadium should be contained in certain grades of steel, namely rebar which is used for the reinforcement of concrete and as such is contained in the vast majority of construction project. Steel manufacturing, still accounts for >90% of demand today though this may change going forwards if vanadium redox batteries take off.
• China has cut back on its worst polluting industries restricting production of vanadium from blast furnace slag while Chinese construction continues to grow.
• US construction has also taken off in recent months with higher prices seen in the US than China for some producers.
• The situation has caused Ferro-Vanadium prices to more than double over the past six months.
• While producers are working on increasing production we feel that production capacity is relatively constrained and it may take some time for the major South African producers to react to fill the supply / demand gap which appears to be opening up.
• Vanadium’s use as a battery metal is still very much in its infancy but trials suggest a new future for vanadium redox batteries and this may drive a very substantial increase in demand in future years.  For now it is demand for steel, in particular, rebar and tightening pollution regulations in China which may serve to hold prices at elevated levels.
• Vanadium Redox Batteries - The shift toward green energy is generating a substantial new market, where the metal in broadly incorporated within industrial-scale redox batteries, which help to even out daily cycles in peak energy output associated with sporadic renewable energy. Managing Director at Pala Investments Ltd. notes “energy-storage technology itself isn’t new, but we’re seeing this moment where a company like Tesla comes along and changes the way people think about its potential”. Advantages to vanadium-flow batteries favour widespread adoption in stationary storage and large-scale grid applications where energy-density isn’t critical, with batteries lasting longer while sustaining performance over multiple charge/discharge cycles (cyclability). The predominantly vanadium batteries are also easy to recycle.
• Emerging vanadium-flow batteries are being tipped as an alternative to lithium-ion in China, with strong government promotion of the technology and among projects under construction is a backup facility in Dalian expected to be twice the operating capacity of Tesla’s plant in Australia.
• Vanadium-flow battery makers are, however, vulnerable to steel movements because they are reliant on the single-niche material. Prices have already received a boost from China, where authorities are demanding stronger steel for buildings in earthquake-prone areas, and growing demand across both sectors may start a scramble for new supply.

 

• [Editor:Wang Linyan]