Niobium is a metal primarily used by the steel industry as a ferroalloy strengthening element. High Strength Low Alloy (HSLA) steel accounts for about 90% of niobium usage with an average content of about 0.03% Nb. Adding niobium reduces the amount and weight of steel required, an important feature for the automotive industry but also for infrastructure. Niobium consumption is driven by GDP but also by the regulatory environment as microalloying enhances construction safety.
Niobium consumption has increased at a 5.0% CAGR between 2010 and 2019, accelerating since 2016. Consumption has benefited from the restructuring of the Chinese steel industry and from the new regulations prescribing stricter standards for construction. Vanadium was seen as the main beneficiary of this ruling as steel mills’ prime choice for microalloying. However, the spike in vanadium prices (ferrovanadium prices increased by about 200% in 2018) caused Chinese mills to substitute niobium to vanadium and Chinese niobium imports increased 30% y-o-y both in 2018 and 2019. Whether steel mills will revert to vanadium now that prices of ferro-vanadium and ferro-niobium are close to parity is unsure as niobium price stability is perceived as a major marketing advantage.
Another key characteristic of the niobium market is its highly concentrated supply. The three largest producers, Brazil’s CBMM, CMOC and Canada’s Magris have a combined 97% market share. CBMM dominates the market with a 78% market share and is seen as the price setter. CBMM’ market dominance will continue as the group will expand its production capacity by 50% in 2020 and is considering more capacity increases in coming years.
CBMM has been proactive at promoting the usage of niobium to the steel industry, implicitly at the expense of vanadium. However, the substitution factor has its limits, determined by technical factors (niobium has a lower solubility than vanadium). Moreover, Roskill forecasts that China’s steel production is close to its peak.
The niobium industry is aware of these issues and already looking for a future beyond steel. Non-steel applications account only for a couple of percentage points in terms of consumption but electrical vehicles (EVs) batteries and nanocrystalline applications could grow at a double-digit rate in the next decade, depending on technological developments.
The steel industry will continue to be the largest market for niobium for the foreseeable future. Betting on EVs is still an uncertain alternative, but the niobium industry is right by starting to look beyond steel to plan for its future.
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