Vanadium market prices are likely to rise from late 2026, supported by tightening supply and growing demand from vanadium redox flow batteries (VRFB). With weak prices in 2024 and 2025, driven by sluggish steel demand, vanadium producers have curbed output. Meanwhile VRFB demand is accelerating, evidenced by robust VEL project pipeline. Rising demand will quickly run into depressed production, where prices will need to increase to support higher utilisation rates in mid-to late 2026.
The vanadium prices are expected to rise, catalysed by a new and fast-emerging demand segment – batteries complemented by a squeeze in supply. As the energy transition accelerates, rising renewable penetration increases the need to regulate and store variable generation. Long Duration Energy Storage (LDES) will buffer supply-demand mismatches by storing energy when demand is low for peak usage times.
Among electrochemical LDES technologies, VRFBs are perhaps at the most advanced commercialisation stage. Even though VRFB’s are expected to capture a fraction of the total LDES market, the impact on the vanadium market is expected to be substantial, with demand expected to nearly triple by 2040. While the long-term fundamentals of the vanadium market look promising, today’s low-price environment has tightened liquidity and created strained balance sheets for many producers, forcing them to cut their output.
Sluggish crude steel production has led vanadium market prices to historical lows
Vanadium demand is on track to expand rapidly over the next 15 years, rising at a CAGR of nearly 7%, but this growth will be driven by VRFBs. In the near term, vanadium remains primarily a steel additive (ferrovanadium and vanadium nitride), keeping demand tethered to crude steel production.
Crude steel production has weakened, driving down vanadium demand. This is especially true in China, which has historically been a materially important region for vanadium consumption. Since 2020, Chinese crude steel production has edged lower at a CAGR of -0.5%, reflecting weak property activity (curtailing rebar demand) and policy efforts to reduce overcapacity. The combination of softer steel demand and resilient supply has depressed prices, squeezing producer margins.
Prices have undershot historical norms. After touching $9.20 /lb for China V2O5 98% DAP in February 2022, vanadium prices have declined by more than 47% amid a market surplus driven by demand disappointment. By September 2025, prices had fallen to $4.86 /lb – well below long run averages – underscoring a cyclical trough brought on by slower steel and delayed upside from energy storage.
Vanadium producers are struggling amid a low pricing environment
Producers are retrenching in response to weak pricing. Utilisation cuts and cost discipline have become widespread, with western output declining since 2023 and Chinese producers now following suit in 2025. Across the industry, companies are pursuing cash preservation measures including scaling back production, deferring CAPEX spending and trimming overheads, to weather the downturn.
South Africa producer Bushveld has been among the hardest hit, sitting on the brink of bankruptcy. In November 2024, it sold the Vanchem asset to private equity firm SPR for roughly $40 million to ease financial pressure and undertook a controlled shutdown at Vametco in 2024 Q3. The restart is planned for 2025, with a focus on tailing extraction to reduce costs and risk.
Brazilian producer Largo has also faced financial strain, requiring additional funding for liabilities and working capital. US tariffs on high-purity vanadium have compounded their financial issues by complicating sales to American buyers. While ferrovanadium sales to the US have been unaffected, sales of high-purity products have faced delays and defaults in some instances, lowering margins. In response, Largo has cut output and reduced non-essential personnel at mine sites as a cost reduction measure.
Chinese producers are also seeing mounting pressures due to low demand. Leading producers such as Pangang, Jianlong Group and HBIS are operating below capacity to meet demand, with Pangang also pursuing procurement and logistic cost reductions to stabilize performance.
Given the current struggles of existing producers, The project pipeline remains muted in a harsh pricing environment. Although nearly 100 new projects have been identified by CRU, most are still classified as speculative, with only a single-digit number of plants in mid-to-late stages of the project development cycle.
Reflecting greater caution, CRU has downgraded prospective supply additions. Evraz’s Uzlovaya plant is the lone “committed” project. Other advanced projects such as South African Steelpoortdrift and Australian Vanadium are advancing slowly as they secure financing, with limited urgency to commission capacity at current price levels.
Chinese expansion of electrolyte capacity will strengthen demand
China’s expanding pipeline of vanadium electrolyte projects will support utilisation of existing vanadium capacity in the region. Many new projects will be concentrated in areas with abundant vanadium resources and form industrial clusters. The Panzhihua Vanadium and Titanium Industrial Development Zone in Sichuan exemplifies this, hosting mines, electrolyte producers, battery manufacturers and energy storage stations all within one ecosystem.
Locally grouping processes ranging from ore extraction to downstream processing and application of final product allows producers to capture scale benefits, vertical integration and logistical efficiencies. This will aid in lower cost and accelerated deployment.
New electrolyte projects are also supported by provincial or central policy. China’s central energy policy mandates 12 GWh of VRFB capacity will be built by 2027. Provincial policies, such as Sichuan’s vanadium implementation plan, prioritise industrial clustering, set production targets, fund pilot demonstrations, and provide fiscal support. These policies are designed to secure long run energy storage capabilities, and by extension to stimulate upstream vanadium demand via electrolyte production. As a result, this should create a source of price support even as steel-related demand falters.
Prices will rise from year end and have different implications for each market player
As VRFB uptake builds (supported by electrolyte capacity additions) and high-cost or financially stressed producers curtail output, the market surplus should narrow. Steel production will recover, stemming from growth in ex. China Asian countries, contributing to the demand boost. A more disciplined project pipeline further reduces the risk of oversupply. Together, these dynamics point to a medium-term recovery in vanadium market prices, with energy storage progressively offsetting steel sector softness and making vanadium an energy transition metal from steel alloy.
This price rise will bring its own set of challenges for producers, consumers and traders. For producers, higher prices expand margins and improve the bankability of new projects. This will allow idled capacity to re-enter the market, while also supporting prospective from new projects to increase. Yet, as VRFB deployment scales, demand for V2O5 powder will intensify, prompting producers to shift towards producing battery-grade material in favour of flake for FeV.
Consumers, who have benefited from a low-price backdrop and correspondingly lower input costs, will face margin compression as prices rise. If prices overshoot or remain elevated, substitution towards other materials can occur.
VRFB uptake and the resulting price rise will increase the role of traders in the market. Market growth and increased geographical fragmentation over the long term will allow traders to increase their margins via arbitrage pricing in different regions. In line with established commodity playbooks, traders are also likely to expand their role through structured finance of new projects to secure offtake. Ultimately this positions them as critical intermediaries in the market, smoothing regional imbalances while capturing value from volatility.
Vanadium market dynamics are set for a change as we move to a metals economy. Vanadium and the broader critical metals landscape are becoming increasingly volatile. In this uncertain environment, it is crucial that suppliers, traders, end-users and financial institutions stay ahead of these fast-moving developments. CRU provides both ready-made intelligence and tailored research to help organisations anticipate change, mitigate risk, uncover opportunity and enable well-informed, forward-leaning decisions. To discover how CRU can support your strategy across the rare earths and critical metals environment, through pricing services, special reports and consulting projects, please get in touch.
