Vanadium prices were locked in a punishing multi-year slide where vanadium pentoxide (V2O5) prices fell more than 47 percent from a February 2022 peak of US$9.20 per pound to a cyclical trough of $4.86 per pound by September 2025, well below long-run averages.
The first half of 2026 has brought tentative signs of a turn, and much of the credit belongs to an old, reliable demand driver: steel.
After three straight years of contraction, global steel demand is finally showing signs of stabilizing.
The World Steel Association's latest outlook points to modest global growth of roughly 0.3 to 1.3 percent in 2026, with developed markets doing much of the heavy lifting — US and European demand is expected to climb on the back of infrastructure and defense spending, while India continues to post close to 9 percent annual growth.
China, still vanadium's single largest steel market, remains in decline, but even there the contraction is decelerating as the property downturn works its way through the system, and stricter rebar standards introduced in 2025 mean each metric ton of Chinese steel now requires more vanadium than it used to.
That steadier steel backdrop is showing up directly in vanadium pricing.
Ferrovanadium prices in the US jumped roughly 19 percent quarter-over-quarter in Q1 2026 to around US$46,800 per metric ton, while China's ferrovanadium index rose about 24 percent over the same period to an average near US$13,131 per metric ton, as tightening feedstock availability, higher production costs and steadier steel-sector buying pushed prices upward across most regions.
Supply still runs through China
Vanadium's supply picture remains as concentrated as ever.
As noted by the latest USGS data, China remains the top vanadium producer, with output of 82,000 metric tons in 2025, about even with its 84,000 metric tons in 2024 but up significantly from 70,000 metric tons in 2023. As Chinese supply grows, total global mined supply increased from 104,000 metric tons in 2023 to 118,000 metric tons in 2024, but pulled back to 110,000 metric tons in 2025.
Environmental regulations, energy controls and long project timelines have restricted new capacity, leading to a year-over-year drop in global production. Most of this impact occurred in Sichuan's Panzhihua-Xichang vanadium-titanium belt, which is dominated by a few large integrated producers.
Additionally, low prices pushed Western and Chinese producers alike to curb output and shelve expansion plans.
Speaking with the Investing News Network at the Fastmarkets Global Battery and Critical Materials Conference in Las Vegas, Amy Bennett, principal consultant at Fastmarkets, offered a more tempered read on where the vanadium battery story stands.
For years, vanadium redox flow batteries (VRFBs) were pitched as the technology that would finally give vanadium a battery-metals growth story to rival lithium's.
Bennett isn't so sure that story is playing out as expected, at least outside China.
Much of the early enthusiasm for VRFBs coincided with a period when energy storage systems (ESS) leaned on NMC-type cathode chemistries, she said, but that's changed.
"We think that vanadium is actually starting to lose out in this conversation," Bennett said, pointing to the ESS sector's decisive shift toward LFP battery chemistry — itself dominant in Chinese battery manufacturing — as a headwind for flow batteries' cost case.
She added that VRFBs, once considered particularly well suited to extreme-temperature environments, have simply fallen out of the industry conversation: "We're just not hearing people talk about them so much anymore ... it is good to have these multiple chemistries, multiple options."
While VRFBs struggle to gain traction in the West’s battery storage segment, China is expanding its own vanadium-battery capacity.
Chinese producers have kept building out VRFB, or VFB, capacity through H1 2026, with projections that the country's cumulative installed capacity could exceed 8 gigawatt hours this year, consuming an estimated 35,000 to 40,000 metric tons of V2O5 equivalent.
A wave of vanadium electrolyte production has accompanied that buildout, with planned capacity across major Chinese producers — including Jianlong Group, Pangang Group Vanadium Titanium, Wontai Power and Shanghai Electric — reportedly surpassing 4.5 million cubic meters annually as of May.
Broadly, as VRFBs are overshadowed in the Western investment narrative, China is scaling the technology at home.
Listen to the full interview to hear more from Fastmarkets' Amy Bennett on the vanadium landscape as well as her forecast for the graphite and anode material market.
Steel remains the market's anchor
Whatever happens with batteries, steel still does the heavy lifting for vanadium demand. The alloying segment accounts for close to 90 percent of vanadium's total market volume in 2026 by some industry estimates, and that isn't expected to change quickly.
That's part of why Bennett sees the broader energy storage narrative, and the AI-driven data-center power demand behind it, as more durable than some skeptics assume, even if vanadium's specific slice of it has narrowed.
"In the US, at least, we seem to be sort of almost running out of electricity," she said, arguing that even stripped of the AI buildout story, "there's sort of a structural industrial change happening within the US that will support the ESS business."
She pointed to broader Fastmarkets estimates that ESS demand could surpass EV battery demand by around 2030, a shift she called more dramatic and faster-moving than analysts anticipated even a few years ago.
Vanadium market outlook: A slow, supply-led recovery
Most forecasters, including CRU Group, still expect vanadium's turn to come later this year rather than sooner, as curtailed production runs into firmer demand from both steel and storage.
Analysts broadly expect the market to tip into a modest deficit by late 2026, which should support further price gains into 2027, though the timeline depends heavily on how quickly Chinese producers respond to better margins.
Ultimately, the sector faces a persistent challenge: promising demand narratives often outpace the actual rate of investment and development. Bridging this gap will require significantly faster alignment and commitment from both government and private capital than current efforts allow.
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Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
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