Tight supply on the spot market has fuelled upward price momentum across all regions. Most notably the biggest price gains were found in the USA, where ferro-vanadium prices jumped by around 10% month-on-month. Solid contract demand is effectively leaving the spot market short of material, as sellers prioritise commitments. In addition the tightness in the Chinese vanadium pentoxide market has limited converter volumes of ferro-vanadium, which is having an adverse effect on ferro-vanadium sea-borne supply. We expect the tight supply situation to persist. We are less sure, however, whether or not the recent demand strength experienced since the start of 2013 will prevail. Sellers report customers are beginning to show a preference for smaller tonnages. In addition US and European sellers are acting more aggressively to realise a sale. The deterioration in demand therefore suggests softer prices, although we expect prices to stay at or above current levels, given restricted supply availability.
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