Rigid Demand Underpins While Costs Restrain; Aluminum Fluoride Prices Set to Stabilize Short Term [SMM Fluoride Salt Weekly Review]

SMM, July 16:

This week, transaction sentiment in China's aluminum fluoride market softened somewhat, while aluminum fluoride prices remained stable. As of now, SMM aluminum fluoride prices closed at 10,950-11,400 yuan/mt; cryolite prices held steady, with SMM quoting 7,000-9,000 yuan/mt.

Raw material side: China's 97% fluorite wet powder market consolidated on a strong note this week, with mainstream delivered prices at 3,100-3,450 yuan/mt, while regional price spreads persisted. Supply side, affected by safety incidents, nationwide mine safety inspections intensified markedly, and most mines in core production areas like Zhejiang and Fujian have entered shutdown self-inspection and rectification stages, dragging down the industry's overall operating rate and tightening spot cargo availability. Although production resumptions at some northern mines and increased imports from Mongolia provided partial supplement, supply remained tight overall amid widespread sentiment of holding back from selling and holding prices firm among ore sellers. Demand side, still in the traditional off-season, fluorine chemical enterprises kept operating rates reduced, hydrofluoric acid operating rates stayed low, and downstream demand in refrigerants and fluoropolymers was sluggish, with procurement mostly need-based, capping price upside. As the support from tightening spot supply gradually emerged, market sentiment improved, and transaction prices edged up. However, with no fundamental improvement in off-season demand, the sustainability and upside room of this rebound still face pressure. China's aluminum hydroxide market drifted lower this week, with SMM weighted average price at 1,690 yuan/mt, edging down 0.41% WoW. The sulphuric acid market consolidated at highs. Overall, raw material price trends diverged, and comprehensive production costs for aluminum fluoride remained high.

Supply side, trapped in a negative cycle of high costs, deep losses, and low operating rates, rising raw material prices exacerbated cost-side losses, widening the loss margin, prompting more maintenance shutdowns and flexible production adjustments, further reducing overall operating rates. Some enterprises adopted a contraction strategy, prioritizing long-term contract deliveries with virtually no new production schedules, limiting effective supply growth. Demand side, downstream operating aluminum capacity stayed high, providing a rigid demand floor for aluminum fluoride, but aluminum smelters remained cautious in procurement, mainly restocking on a need-to basis and pushing for lower prices, with no incremental purchase demand released.

Commentary: This week, upstream raw materials for aluminum fluoride diverged—fluorite edged up, aluminum hydroxide weakened, and sulphuric acid consolidated at highs. Industry-wide production costs stayed high, making it difficult for producers to restore profitability, and production stockpiling sentiment was weak. Currently, the tug-of-war between upstream and downstream is intense, with no clear directional driver, and transactions mostly involve sporadic need-based restocking. Short-term aluminum fluoride prices are expected to hold in a stalemate, with limited room for movement. Close attention should be paid to raw material cost dynamics and marginal adjustments in downstream aluminum enterprises' procurement pace.