SMM May 31:
Cost side continued to exert upward pressure, especially with sulphuric acid prices climbing strongly and repeatedly hitting new highs. Cost-driven momentum dominated market direction, pushing aluminum fluoride prices to continue rising in May against a backdrop of overall weak supply and demand. As of month-end, SMM aluminum fluoride prices closed at 11,480-12,000 yuan/mt, while the cryolite market remained generally stable, with SMM cryolite quoted at 7,000-8,500 yuan/mt.
In May, China's fluorite market prices fluctuated downward. Supply side, as operating rates at mines in major northern producing areas continued to recover, domestic spot supply steadily increased. Meanwhile, imported fluorite from Mongolia arrived at ports and flowed into the market, further exacerbating the loose supply pattern. However, recent coal mine safety accidents in Shanxi triggered market expectations of stricter mine safety and environmental protection regulations, which may cause periodic disruptions to production pace at some mines going forward, and the market still held a certain wait-and-see sentiment toward the supply side. Demand side performance remained sluggish. Downstream hydrofluoric acid enterprises, constrained by insufficient operating rates in end-use industries such as refrigerants and fluoropolymers, maintained needs-based restocking for raw material procurement, with limited follow-through on large orders, and overall market trading atmosphere was sluggish. Affected by weak raw materials and insufficient end-use demand, the hydrofluoric acid market price center continued to shift downward, further weakening support for the fluorite market. Overall, the current market remains in a relatively loose supply-demand pattern under the combined influence of multiple bearish factors including recovering domestic supply, continued supplementation of low-priced imported cargo, and weak downstream demand. In the short term, fluorite prices are likely to continue consolidating on the weak side. As of May 29, the SMM 97% fluorite powder average delivery-to-factory price reached 3,250 yuan/mt, down 3.93% from April 30. As another core raw material for aluminum fluoride, the aluminum hydroxide market was under pressure from fluctuating and weakening alumina prices, with aluminum hydroxide prices under pressure. Toward month-end, as the alumina market improved, aluminum hydroxide prices recovered somewhat. As of May 29, the SMM average ex-factory price of aluminum hydroxide was 1,654 yuan/mt, down 0.56% from April 30. In addition, in May, China's sulphuric acid market continued the consolidation trend at highs from late April, overall exhibiting characteristics of fluctuating at highs, an upward-shifting center, and regional divergence.
Affected by strong raw material cost support, weak end-use demand, and a tight balance in market supply, the market fell into a stalemate. On one hand, elevated sulphur prices combined with supply gaps from facility maintenance firmly underpinned acid prices, limiting significant downside room. On the other hand, downstream entered the demand off-season, and high-priced raw materials also suppressed purchasing enthusiasm, leaving the market lacking sustained upward momentum, with prices mainly fluctuating at highs. Approaching month-end, concentrated maintenance in June gradually wound down, industry participants adopted a cautious stance toward the outlook, market trading atmosphere turned sluggish, and prices gradually reverted toward cost lines and reasonable supply-demand ranges. Overall, in May, aluminum fluoride raw material trends diverged — fluorite and aluminum hydroxide weakened slightly, sulphuric acid remained firm at highs, and overall cost support weakened marginally. Supply side, the negative cycle of rigid high costs — deep losses — sluggish operating rates continued. Raw material prices diverged, with fluorite pulling back slightly while sulphuric acid remained firm. Overall costs stayed elevated, with widespread losses across the industry worsening. Enterprise maintenance and flexible production increased, and the industry operating rate remained at a low level of around 40%, limiting effective incremental supply. Demand side, downstream operating aluminum capacity remained stable at high levels, providing rigid baseline demand for aluminum fluoride. However, aluminum enterprises primarily restocked based on immediate needs and adopted a wait-and-see approach to push for lower prices, with no additional incremental demand for the time being.
Recently, raw material market trends diverged. Sulphuric acid prices maintained a fluctuating trend, while fluorite and hydrofluoric acid markets remained weak. Although some raw material prices pulled back, supported by high sulphuric acid prices, overall costs only declined marginally and the cost center remained elevated, continuously squeezing enterprise profit margins. Supply side, current spot supply in the market was relatively stable overall, with enterprises mostly maintaining normal shipments pace. Demand side, performance remained subdued, as downstream aluminum enterprises primarily focused on digesting inventories, maintaining procurement strategies of restocking on demand and pushing for lower prices with a wait-and-see stance. Overall market trading activity was sluggish. At month-end, the market maintained a steady posture, watching for the outcome of the new round of aluminum fluoride tender prices. However, as the raw material side showed signs of easing, prices are expected to be slightly under pressure next month. Going forward, close attention should continue to be paid to dynamic changes on the raw material cost side, as well as marginal adjustments in the procurement pace of downstream aluminum enterprises.
