Asian Metal: The new national standard on rebar will go into effect on November 1. What effects do you think the new standard will impose upon the supply-demand status in the Chinese vanadium market?
MR. Lv: The new rebar standard will surely spur downstream demand for vanadium products to pick up quickly. But considering the current status of raw material supply, we can say that it's far from being enough, and so vanadium prices are expected to keep going up for a long time. But if vanadium prices go up too dramatically within a short period, niobium products will surely be adopted as substitutes. According to Karl Marx, a certain 10 percent will ensure its employment anywhere; 20 percent will produce eagerness, 50 percent positive audacity; 100 percent will make it ready to trample on all human laws; 300 percent, and there is not a crime which it will not scruple, nor a risk it will not run, even to the chance of its owner being hanged. So if supply shortage in the vanadium market intensifies continuously, the market environment will finally loosen up.
vanadium nitride (V77%-81%, N14%-18%, grain size 10-40mm, production standard GB GB/T20567-2006)
Asian Metal: Prices for vanadium pentoxide flake keep going up, and what do you think is the price ceiling for them?
MR. Lv: The continuous upward movement in vanadium pentoxide flake prices is totally decided by the supply-demand status. Affected by new industrial policies, vanadium slag is banned from being imported, and environmental protection policies prevent small-sized vanadium plants and plants extracting vanadium from stone coal from increasing their outputs. As a result, the vanadium pentoxide flake market falls into severe supply shortage, and therefore it becomes inevitable for prices to soar. But in my opinion, vanadium prices can't keep going up all the way ahead. When they reach a certain point, many small-sized producers will be goaded to resume production while trying to dodge government inspections, and accordingly supply will increase and prices will surely fall back. In addition, though Chinese government bans importing vanadium slag, there are no restrictions on importing ferrovanadium and vanadium nitride. So if vanadium prices in the Chinese market keep rising, overseas suppliers are surely encouraged to expand their businesses into the Chinese market. At present, Chinese vanadium output accounts for about 30% of the global total, and if we talk only from the supply-demand perspective, abundant resource in the overseas market will be able to meet demand from the Chinese market. Once conditions on importing from abroad mature, the upward trend in the Chinese vanadium market can be restrained by importing from overseas markets. The market price is relative. As long as there is demand in the downstream, the price rise is reasonable. There is no concept of top.I estimate that the price of V2O5 98%min will remain above 400,000 yuan/ton for a long time.
Asian Metal: What are the main factors restraining increases in raw material supply in the Chinese vanadium market?
MR. Lv: Except plants which extract vanadium from stone coal, Chinese suppliers of vanadium raw material have basically reached their full-scale operation, and if they want to increase outputs, they can only build more production lines. There are quite a few factors stemming vanadium raw material supply from increasing, but the most core factor is China's environmental policies. Banning on importing vanadium slag, small-sized producers shutting down, no plans on building new vanadium-extracted-from stone-coal plants to be approved, and existing such plants slow in increasing their outputs, all these reasons contribute to the hardness in increasing vanadium raw material supply in China. And in the light of the current situation, I believe that supply shortage is unlikely to be abated in the short term.
Asian Metal: Does your company have any output increase plans since demand for vanadium products is good?
MR. Lv: We have no plans for increasing outputs, but we indeed very hope to reach full-capacity production as our operating rate for ammonium metavanadate is only 50%. The main reasons for our low operating rate are environmental policies and unavailability of vanadium slag. In particular, prices for vanadium slag directly link up with vanadium prices, and we never feel buying enough high-quality vanadium slag.
Asian Metal: How do you think of future development trend on the vanadium extraction industry from stone coal?
MR. Lv: Smooth development of this industry is the most effective way to increase raw material supply for the vanadium market. At present traditional extraction companies keep normal production and their vanadium pentoxide outputs are also on the rise in a planned way. But for small-sized extraction plants or for companies planning to build new extraction plants, it will be difficult for them to do this. For the former, it will cost them huge amounts of money to carry out equipment upgrading and to maintain normal operation later. Take waste water treatment as an example. It costs as high as RMB2,000-3,000 (USD292-439/t) to crystallize one ton of waste water by evaporation process. So high production costs make it difficult for such extraction plants to continue with their operation and so many of them shut down. While for companies which plan to build new extraction plants, they can't have their plans to be approved at all by environmental authorities. So if pressure from environmental authorities does not abate, I have no confidence that the overall extraction industry would be able to increase its output.
Asian Metal: Do you have any suggestions to Asian Metal on our role as an industrial information website in the development of vanadium industry?
MR. Lv: In an era of information today, upstream, midstream and downstream companies in the vanadium chain are all sensitive to information. A piece of news can spread to every corner of the market when it just comes out, and anyone who has direct and convenient access to information can gain a better position in negotiations. Industrial information websites are effective intermediary agents on information, but they also can do harm to the industry if they fail to maintain their neutrality. Only websites which are always neutral, timely in collecting accurate information, and provide only unbiased points of views can lead the market into healthy development. Asian Metal has been long devoted into doing this and this is quite praiseworthy. We hope that Asian Metal will continue to take the lead in the metal information industry and make your share of contribution to a better vanadium market.