Futu Securities' APP learned that Huabao Securities issued a research report stating that in May, the price of vanadium-titanium powder in the main production area decreased. It is expected that the increase in iron water production in the steel mills will bring an increase in the supply of vanadium slag raw materials. The demand for downstream rebar steel is still weak, and the capacity of long-time energy storage bidding has increased significantly, and emerging demand continues to be highly prosperous. Overall, the upstream supply and demand are loose, and the price of vanadium pentoxide in the downstream has rebounded, and the scissors difference has expanded, which is beneficial to the improvement of the gross margin of vanadium products. Continue to pay attention to related investment opportunities brought by the rematching of supply and demand structure.

Huabao Securities' main views are as follows:

Upstream: In May, the steel enterprises in the Panxi area, the main producer of vanadium slag, increased the production of blast furnace iron water, which improved the supply of vanadium slag.

The prices of vanadium-titanium powders in different regions of China rose and fell differently in May. Among them, the price of vanadium-titanium powders in Panxi region fell by 14.31% month-on-month, and the price in Chengde region rose by 5.22% month-on-month. Overall, the improvement of the blast furnace output of steel mills in the Panxi region has increased the demand for vanadium-titanium powder, but the profitability of steel enterprises in the region is poor, which has suppressed the price of vanadium-titanium powder. The price of vanadium-titanium powder in Chengde region rose. In May, the steel enterprises in the Panxi area, the main producer of vanadium slag, increased the production of blast furnace iron water, which improved the supply of vanadium slag.

Midstream: The supply of vanadium pentoxide increased month-on-month, and the prices of vanadium products rose compared to the previous month.

The 23 sampled companies' vanadium pentoxide production was 10,745 tons, an increase of 9.17% month-on-month; the output of vanadium iron was 3,220 tons, a decrease of 8.21% month-on-month; the output of vanadium nitrogen alloy was 37.27 million tons, an increase of 8.28% month-on-month; and the ammonium metavanadate output was 1,631 tons, an increase of 9.54% month-on-month. In terms of prices, the prices of vanadium pentoxide, vanadium iron, vanadium nitrogen alloy, and ammonium metavanadate rose by 6.82%, 5.12%, 6.4%, and 7.61%, respectively. Overall, the supply of vanadium products has increased, but the production of vanadium iron related to steel is reduced month-on-month, reflecting the weak purchasing of downstream steel enterprises. The supply of vanadium nitrogen alloy related to other new materials and ammonium metavanadate related to chemical industry has increased.

On the demand side, the demand for steel continues to shrink, and the bidding for long-time energy storage continues to be highly prosperous.

In May, the average daily crude steel output was 2.9098 million tons, a decrease of 0.78% month-on-month. However, considering that the main vanadium-consuming varieties, rebar production is still at a low level, with a weekly output of about 2.32 million tons, the average weekly output of rebar in the first four weeks of April was 14% lower than the same period last year, causing the demand for vanadium in the steel industry to be generally weak. On the energy storage side, according to statistics, the total capacity of the 4-hour long-time energy storage bidding projects in May was 3020 MWH, an increase of 151.67% month-on-month; among them, Three Gorges Energy Qinghai Hainanzhou 180MW/720MWH project, Baotou Bailin/Erdos Wanchengcheng grid side 400MW/1600Wh project. It reflects that the overall demand for energy storage is still strong.

Risk Warning: The investment in energy storage projects is not as expected, the sharp reduction in rebar production has caused the supply of vanadium products to be greater than the demand. The listed companies mentioned in this report are intended to illustrate the current development status of the industry and do not involve coverage and recommendation.