Vanadium Market Fundamentals History and Projection. March 28, 2013 Metal Bulletin 14th Annual Ferroalloys Conference Hong Kong

Transcription

1 Vanadium Market Fundamentals History and Projection 1

2 Vanadium Production 2

3 Vanadium Production by Country 2012 Total 71,500 MTV North America 6% Europe 8% China Russia South Africa South Africa 18% China 53% North America Europe Japan Korea Russia 10% 3

4 MTV 80,000 Global Vanadium Production CAGR 5.1% 70,000 60,000 50,000 40,000 30,000 20,000 10,000 Brazil Australia India Taiwan Korea Japan North America Europe Russia South Africa China - 4

5 MTV 45,000 ex-china Vanadium Production CAGR (1.4%) 40,000 35,000 30,000 25,000 20,000 15,000 10,000 Australia India Taiwan Korea Japan North America Europe Russia South Africa 5,000-5

6 MTV 45,000 China Vanadium Production CAGR 19.0% 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000-6

7 MTV 140,000 Global Vanadium Production , ,000 80,000 60,000 40,000 20, CAGR 5.1% CAGR 12.3% Brazil Australia India Taiwan Korea Japan North America Europe Russia South Africa China - 7

8 140,000 Vanadium Production by Country 120, ,000 80,000 60,000 40,000 20,000 Brazil Australia India Taiwan Korea Japan Europe North America South Africa Russia China

9 MTV per Year 60,000 Increase in Vanadium Production 2012 to ,000 40,000 30,000 20,000 10,000 India Taiwan Korea Japan South Africa Russia Europe North America Brazil Australia China - 9

10 MTV 70,000 China Vanadium Production CAGR 11.5% 60,000 50,000 40,000 30,000 20,000 10,000-10

11 MTV China Vanadium Supply from Coproduct Slag 60,000 50,000 40,000 30,000 20,000 10,000 0 Pangang (Panzhihua and Xichang) Chuan Wei Desheng Panzhihua Region Others Chengde Kunming Jianlong (Chengde/Heilongjiang) Jinzhou, Emei, Shenyang (Russian Slag) 11

12 MTV 70,000 ex-china Vanadium Production CAGR 13.3% 60,000 50,000 40,000 30,000 20,000 10,000 Brazil Australia India Taiwan Korea Japan North America Europe Russia South Africa - 12

13 Windimurra Vanadium Project Owned and operated by Midwest Vanadium Pte. Ltd. a wholly owned subsidiary of Atlantic, Ltd. (ATI:ASX). Full capacity in excess of 6,300 MTV per year as 80% ferrovanadium Modifications to front end of the plant recently completed. Ferrovanadium product delivered to several North American customers in late 2012 and early 2013 Expected to reach 80% of capacity by June

14 Windimurra Project 14

15 Windimurra Vanadium Mine 15

16 Windimurra Ferrovanadium Pour 16

17 Windimurra Ferrovanadium 80% 17

18 % of Total 100% Global Vanadium Production by Country 90% 80% 70% 60% 50% 40% 30% 20% 10% Australia Brazil North America India Taiwan Korea Japan Europe Russia South Africa China 0% 18

19 Vanadium Production History CAGR 5.1% All growth from China Forecast CAGR 12.3% Highly dependent upon planned expansions of vanadium coproduct production from Chinese steel mills Australia and Brazil become important new suppliers offering some diversity from the Big Three (China, South Africa, Russia) 19

20 Vanadium Consumption 20

21 V Consumption by Region ,900 MTV India 3% Other 11% CIS 8% Europe 20% North America 13% China 35% Japan 10% 21

22 Vanadium Consumption by Application % 1% 1% 0% 3% 3% HSLA Steel Special Steel 30% Super Alloys/Titanium Alloys Chemicals Cast Iron 60% Energy Storage 22

23 MTV 90,000 Global Vanadium Consumption CAGR 7.2% 80,000 70,000 60,000 50,000 40,000 30,000 20,000 India CIS Japan Other North America Europe China 10,

24 MTV 60,000 Ex-China Vanadium Consumption CAGR 3.7% 50,000 40,000 30,000 20,000 India CIS Japan Other North America Europe 10,

25 MTV 30,000 China Vanadium Consumption CAGR 20.0% 25,000 20,000 15,000 10,000 5,

26 MTV 140,000 Global Vanadium Consumption 120, CAGR 10.3% 100,000 80, CAGR 7.2% India CIS Japan 60,000 Other North America Europe 40,000 China 20,

27 MTV 80,000 ex-china Vanadium Consumption CAGR 6.7% 70,000 60,000 50,000 40,000 30,000 20,000 India CIS Japan Other North America Europe 10,

28 MTV 70,000 China Vanadium Consumption CAGR 15.6% 60,000 50,000 40,000 30,000 20,000 10,

29 Vanadium Consumption Drivers Growth in specific vanadium consumption rates Substitution of HSLA steel for C-Mn Steel Growth in Global Steel Production Volume Other growth opportunities not considered in this analysis Growth in Titanium Alloy Demand New Applications in Energy Storage 29

30 KgV/MT Steel Specific Vanadium Consumption Rates 2012 North America Europe Japan CIS World Average Other China India

31 KgV/MT Steel Specific Vanadium Consumption World Average CAGR 2.0% North America Europe Japan World Average Other CIS China India - 31

32 KgV/MT Steel Specific Vanadium Consumption ex-china CAGR 2.7% World Average CAGR 2.0% ex-china China CAGR 5.4% World Average China

33 KgV/MT Steel Specific Vanadium Consumption Trends North America Europe Japan World Average Other CIS China India - 33

34 KgV/MT Steel Specific Vanadium Consumption Trends World Average CAGR % ex-china CAGR 3.2% China CAGR 10.2% ex-china World Average China

35 % of Total Steel Produced 25% Vanadium Steel Market Share 20% 15% 10% 5% Assumes average vandium content in HSLA vanadium steel 0.05% 0% 35

36 000 MTV 2,000,000 Global Steel Production 1,800,000 1,600,000 1,400,000 1,200,000 1,000,000 History CAGR 5.0% Projected CAGR 4.5% 800, , , ,000 Historical data source: World Steel Association

37 Sources of New Vanadium Demand (MTV/Yr.) Growth in Steel Production 24,185 19,806 Change in Specific Consumption 13,267 31,386 Total Change 37,452 51, Growth in Chinese Consumption 22,894 31,243 Growth in ex-china Consumption 14,558 19,950 Total Change 37,452 51,192 37

38 Vanadium Consumption Summary Vanadium consumption grew from by a CAGR of 7.2% Consumption projected to grow from by a CAGR of 10.3% Consumption growth driven by increasing specific vanadium consumption rates and global steel production levels No growth in consumption from increasing demand in titanium alloys or energy storage applications included in this model 38

39 Consumption/Production Balance 39

40 MTV 140,000 Vanadium Consumption & Production 120, ,000 80,000 60,000 40,000 20,000 0 Consumption Production 40

41 MTV ,000 Annual Inventory Change 8,000 6,000 4,000 2, ,000-4,000-6,000-8,000-10,000-12,000 41

42 Excess inventory (Months of Consumption) FeV Price US$/KgV 5 Excess Inventory Vs. Price $80 4 $70 3 $ Current Price US$32.00/KgV $50 $40 0 $30-1 $20-2 $10-3 $0 Excess Inventory FeV Price 42

43 Consumption/Production Summary Global inventories of vanadium grew significantly Excess inventories have been drawn down leading to a tight global inventory situation at the end of Inventory levels as measured by months of consumption projected to remain very tight 43

44 Vanadium Cash Cost Curve 44

45 Vanadium Production by Raw Material 2012 Total 71,500 MTV 11% 21% 68% Coproduct Steel Slag Primary V Ore Secondary 45

46 1,000 4,000 7,000 10,000 13,000 16,000 19,000 22,000 25,000 28,000 31,000 34,000 37,000 40,000 43,000 46,000 49,000 52,000 55,000 58,000 61,000 64,000 67,000 70,000 73,000 76,000 79,000 US$/KgV $30 FeV Cash Cost Curve 2012 $25 $20 $15 $10 $5 $0 MTV 46

47 MTV 140,000 Vanadium Supply by Source vs. Demand 140, , , , ,000 80,000 80,000 60,000 60,000 40,000 40,000 20,000 20, Coproduct Steel Slag Primary V Ore Secondary Consumption 47

48 1,000 6,000 11,000 16,000 21,000 26,000 31,000 36,000 41,000 46,000 51,000 56,000 61,000 66,000 71,000 76,000 81,000 86,000 91,000 96, , , , , , , ,000 US$/KgV $60 FeV Cash Cost Curve $50 $40 $30 $20 $10 $0 MTV

49 US$/KgV $60.00 FeV Cash Cost Equilibrium Price $50.00 $40.00 $30.00 $20.00 $10.00 $

50 Vanadium Production Cost Summary Cash costs for secondary vanadium production necessary to meet market demand in 2012 estimated at US$27.00/KgV for ferrovanadium projection indicates the market will require secondary production units to meet global demand. As a result the cash cost of secondary production will determine market equilibrium price point. Equilibrium point expected to be above US$40.00/KgV for ferrovanadium

51 Energy Storage Applications Our Projection does not include any new demand for vanadium in energy storage applications due to uncertainty in projecting market penetration from emerging technologies. Any new demand from Energy Storage applications in the near future will aggravate already tight market conditions expected

52 MTV 9,000 8,000 Lithium Vanadium Battery V Demand Source: Camelot Ferroalloys, Inc. 8,543 7,000 6,000 5,695 5,000 4,000 3,797 3,000 2,000 1, ,266 2,531 52

53 MTV 25,000 Vanadium Redox Flow Battery V Demand Source: Camelot Ferroalloys, Inc. 23,730 20,000 15,000 15,820 10,000 10,547 7,031 5,000 3, ,172 1,758 53

54 Energy Storage Summary Energy storage applications consumed approximately 850 MTV in 2012 At least one source projects demand for vanadium in energy storage applications to grow to more than 9,500 MTV by Our model does not include any growth in demand from energy storage applications 54

55 China vs. ROW 55

56 MTV ex-china Vanadium Consumption & Production 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 Consumption Production 56

57 MTV 70,000 Chinese Vanadium Supply and Demand 60,000 50,000 40,000 30,000 20,000 10,000 0 Production Consumption 57

58 China vs. ROW Summary Up until 2006 production and consumption of vanadium outside of China were fairly balanced. Subsequently outside of China vanadium consumption has grown significantly faster than production Exports from China are critical to maintain market liquidity in the period

59 Summary Global excess inventory built during have been depleted during Projection indicates very balanced supplydemand scenario and ongoing tight inventory levels leading to prices above US$40.00/KgV Growth in supply necessary to meet growing demand highly dependent upon coproduct steel slag based production in China Potential new demand in energy storage applications could further aggravate the tight market situation Projected new supply from Australia and Brazil important to maintain adequate supply to meet growing demand 59

60 Acknowledgements Prof. Yang Caifu China Iron & Steel Research Institute (CISRI) Beijing, China Mr. Kevin Jones Camelot Ferroalloys Inc. Zelienople, PA USA Atlantic Ltd. Perth, Australia 60

61 Thanks! Terry Perles Pittsburgh, PA USA