February 22, 2019 | Vanadium: Are We There Yet?

After last year’s surge and a brutal price correction, vanadium prices have ticked up again in the all-important Chinese market. This has some investors asking if it’s time to buy into this emerging energy metal story.

The rebound in China is encouraging, but I have to point out that prices are still falling in Europe, of only slightly. It’s by no means clear that the retreat is over. If we pull back to look at the bigger picture, this becomes even more obvious.

As you can see, the current uptick barely shows on the chart. More alarming is that previous spikes were followed by significant “dead cat bounces.” Then prices went back into decline.

The unfortunate truth is that the past tells us that even a year of reasonably stable prices at current levels would not rule out years of subsequent price declines.

The good news is that even a few years near current levels would enable companies that can bring economic vanadium supplies online ASAP to make windfall profits.

This assumes, however, that the global vanadium market remains much as it has been in past decades. As the cost of renewable energy continues falling and the need for industrial-scale energy storage keeps rising, the market for batteries big enough to power cities and factories will grow. Vanadium flow batteries are one proven way to meet this need for decades to come. If they catch on, it will alter the vanadium market drastically, sending demand through the roof.

That’s great, but we’ve only seen baby steps in this direction—a couple “proof of concept” projects—not enough to move the market yet.

So, as much as I see a big future for vanadium as an energy metal, the answer to the question, “Are we there yet?” is… No.

Which energy mineral would I prefer for near-term gains? The one few people yet recognize as an essential part of the new energy story: silver.

Caveat emptor,

Lobo Tiggre February 22nd, 2019

Posted In: Louis James

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