The US government has included several Evraz operations in its latest round of sanctions

These new measures, which target about 400 entities across a range of industries, are part of the US Government's intention to cut Russian revenues coming from the metals and mining sector. Included in the sanctions are Evraz steelmaking operations, which also produce vanadium. Project Blue estimates that Evraz produces a total of 20,000tpy of vanadium, in terms of total vanadium content, slag through its NTMK steelmaking plant and pentoxide through its Tula processing plant. Some of Tula’s pentoxide is processed into ferrovanadium at Evraz’s Nikom Czech subsidiary. 

The vanadium market largely depends on China which accounts for about 60% of production and consumption. Chinese demand is largely exposed to construction and primarily rebar, with current demand impacted by China's weak economy and depressed property market. Although future consumption growth is likely to come from vanadium electrolyte for Vanadium Redox Batteries, the steel sector still accounts for nearly 90% of vanadium consumption in China and also globally. Demand in the world ex-China has been lacklustre, weak in Europe, although more robust in the US in line with the economy.

On the supply side, primary production is likely to be in line with forecasts at Largo, but lower from Glencore and uncertain at Bushveld, given the group’s ongoing restructuring process. Project Blue forecasts flat to slightly lower Chinese vanadium co-steel output, but the demand weakness will more than offset any production decline.

With Western sanctions impacting its vanadium exports, Russia has turned to China, which became a net pentoxide importer in 2023, primarily due to rising Russian imports. Although remaining very low, ferrovanadium prices are higher than the feedstock (pentoxide) plus conversion costs, another indication that the pentoxide market is oversupplied.

In the USA, AMG’s new Zanesville plant is running close to capacity, making the market adequately supplied and the US ferrovanadium premium to European material has dropped to 2.7% in Q2 2024 from 12% in 2023. Project Blue does not exclude that some Russian material still found its way into the US, but the volumes are likely to be very small. Therefore, any US Government new clamp down on Russian vanadium sales into the US will have a marginal impact on the market and prices, if any.