Ferro-vanadium (FeV) demand, which is closely tied to the carbon steel sector, has the potential to grow next year after a sluggish 2024, but economic and geopolitical uncertainties make conditions difficult to forecast.
The outlook suggests FeV consumption will increase, driven by global steel production growth, particularly in countries such as India, as well as a potential rebound in key markets such as the US and Europe. The World Steel Association (Worldsteel) sees 2025 demand rising by 1.2pc to 1.772bn t, after a slight contraction this year. Most of the major economies, including China, are likely to record lower steel demand this year, although India bucks the trend, with robust demand growth expected throughout 2025. In developed economies, steel demand could grow by 1.9pc next year, driven by a recovery in the EU and, to a lesser extent, in the US and Japan.
Buyers in Europe have been wary about purchasing large volumes of FeV in recent weeks, with fewer volumes expected in next year's long-term contracts as steel plants are looking for more flexibility and are "afraid of buying material that in the end they might not need", a trading firm said.
Construction
The construction sector remains a crucial driver of FeV consumption, primarily because of its dependence on steel for infrastructure projects. But the construction industry's challenges, particularly residential construction in developed economies, have dampened overall steel demand. High borrowing costs have stifled housing activity, with interest rate hikes slowing building projects.
"A meaningful recovery in residential construction (in the EU, US and South Korea) is expected to begin from 2025 onwards with the expected easing of financing conditions," Worldsteel said.
Rebar production also has faced challenges, with Chinese steel mills reducing output on lower demand from the real-estate sector up to September, when new rebar standards were introduced by China's government. The new standards were intended to encourage higher vanadium content in steel, but the anticipated FeV demand boost has not yet materialised because overall appetite for the alloy remains suppressed by ongoing struggles in China's real-estate sector.
China's rebar output fell by 1.9pc on the year to 17.7mn t in October, with January-October output showing a 14pc drop from the same period a year earlier, according to data from the National Bureau of Statistics.
Without any lift from China, European FeV prices remain driven primarily by weakness in the continent's own construction sector, which continues to limit steel rebar trading volumes. Argus' weekly Italian domestic rebar assessment was at €550/t ex-works on 11 December, marking an 11pc drop from the start of this year.
Automotive
The automotive sector, particularly the electric vehicles (EV) market, will be a key driver of FeV demand next year. High-strength low-alloy (HSLA) steel — a type of carbon steel known for its superior strength-to-weight ratio — is crucial for light vehicles and EVs.
While light vehicles and EV manufacturing has slowed this year, with factory closures and inventory reductions by major carmakers such as Volkswagen and Stellantis, the industry is expected to recover next year as the push towards sustainability continues.
The green transition, which includes renewable energy projects and electric grid expansions, will further contribute to the demand for HSLA steel and, by extension, FeV.
But EV growth is likely to slow in the short term under the administration of US president-elect Donald Trump, who could prioritise traditional energy sectors, potentially limiting support for renewables, industry participants said.
