Supply-Demand Tug-of-War Lacks Strong Drivers; Aluminum Fluoride Short-Term Prices to Stay Stable [SMM Fluoride Salt Weekly Review]

SMM July 9 News:

This week, domestic aluminum fluoride enterprises saw moderate trading atmosphere, and aluminum fluoride prices remained stable. As of now, SMM aluminum fluoride price closed at 10,950-11,400 yuan/mt; cryolite prices held steady, with SMM cryolite quoted at 7,000-9,000 yuan/mt.

Raw material side: This week, China’s 97% wet fluorite powder market was broadly stable, with mainstream delivered prices at 3,100-3,400 yuan/mt, while regional price spreads persisted. On the supply side, national mine safety inspections intensified—regulatory oversight tightened notably following safety incidents, leading many mines in key production areas like Zhejiang and Fujian to halt production for rectification and self-checks. Overall operating rates declined, and spot supply tightened. Miners showed a strong willingness to hold back from selling and hold prices firm, offsetting the increased supply from production resumptions in the north and arrivals from Mongolian imports. On the demand side, overall weakness prevailed—large fluorochemical plants reduced operating loads, hydrofluoric acid operating rates moved lower, and downstream demand for refrigerants and fluoropolymers contracted. Procurement enthusiasm for fluorite was insufficient, limiting upward price momentum. Currently, tightening supply and weak demand are offsetting each other, and fluorspar prices will likely stay rangebound in the near term. This week, China’s aluminum hydroxide market drifted lower, with the SMM aluminum hydroxide weighted average price at 1,697 yuan/mt, down 1.22% WoW. The sulphuric acid market stood at high levels with narrow fluctuations. Looking at overall raw material performance, raw material price trends diverged, but aluminum fluoride’s comprehensive production costs remained high.

On the supply side, the sector is mired in a negative cycle of high costs, deep losses, and low operating rates. Rising raw material prices exacerbated losses for enterprises, widening loss coverage. Industry equipment maintenance and flexible production increased, and overall operating rates continued to decline. It is understood that some enterprises have adopted contractionary strategies, prioritizing delivery of long-term contracts with virtually no new production scheduling, limiting effective incremental supply in the market. On the demand side, downstream operating aluminum capacity remained high, providing a rigid demand floor for aluminum fluoride. However, aluminum smelters remained cautious in procurement, mainly making just-in-time restocking purchases and pushing for lower prices while waiting and seeing, with no release of incremental procurement demand.

Commentary: This week, the aluminum fluoride raw material market diverged slightly—fluorite prices were stable, aluminum hydroxide drifted lower, and sulphuric acid prices corrected at high levels. The industry’s comprehensive costs stayed high, making it difficult for enterprises to restore operating profits and enthusiasm for production. Currently, the market lacks a trending driver, with a stalemate in the upstream-downstream tug-of-war. Transactions were mainly just-in-time procurement. In the near term, aluminum fluoride prices are expected to remain stable, with limited room for wild swings. Going forward, close attention should be paid to dynamic changes on the raw material cost side, as well as marginal adjustments in the procurement pace of downstream aluminum enterprises.