Strong Surge in Sulphuric Acid Prices Pushed Up Costs, Aluminum Fluoride Prices Raised Significantly Again [SMM Fluoride Salts Weekly Review]

SMM April 16:

Trading activity among China's aluminum fluoride enterprises was moderate this week, with aluminum fluoride prices fluctuating upward. As of now, SMM aluminum fluoride prices closed at 10,980-11,900 yuan/mt; cryolite prices remained stable, with SMM cryolite quoted at 7,000-8,500 yuan/mt.

Raw material side: Prices of core raw materials for aluminum fluoride diverged, with comprehensive cost support continuously strengthening, building a solid price floor for the aluminum fluoride market. This week, delivery-to-factory prices of 97% fluorite powder in China remained stable, with mainstream transaction range at 3,300-3,550 yuan/mt and significant regional price spreads. Northern mining areas quoted lower prices, while southern major producing areas maintained high prices supported by tightening supply. In terms of supply, safety inspections in major domestic producing areas continued to tighten, compounded by the impact of earlier safety accidents, keeping operating rates of southern mines and beneficiation plants at low levels. Market supply circulation remained tight, presenting an overall rigid contraction pattern with strong spot cargo support. Demand side, downstream hydrofluoric acid enterprises resumed stable operations after the holiday, with just-in-time procurement following in an orderly manner. Since April, anhydrous hydrogen fluoride prices rose significantly, with smooth cost transmission providing clear support to the fluorite market. However, the hydrofluoric acid industry saw profit margins squeezed by high sulphuric acid prices, with enterprises mainly restocking on an as-needed basis and limited willingness to chase higher prices in bulk. Considering supply-demand fundamentals and cost transmission logic, SMM expects the fluorite market to hold up well in the near term, more likely to rise than fall. Aluminum hydroxide prices were under pressure, with the current SMM weighted average price at 1,667 yuan/mt, down 2.06% WoW. The sulphuric acid market performed strongly, as geopolitical instability in the Middle East tightened raw material sulphur supply, combined with tightening supply and robust demand, sulphuric acid prices were continuously raised to 1,950-2,150 yuan/mt. Overall, aluminum fluoride raw material costs rose, significantly increasing production pressure on enterprises.

The supply side presented a negative cycle of rigid cost increases—deeply pressured profitability—low operating willingness. Recently, prices of core raw materials such as fluorite, sulphuric acid, and aluminum hydroxide continued to rise, driving aluminum fluoride production costs to climb significantly. The industry fell into deep losses with cost inversion, severely dampening production enthusiasm, with the overall industry operating rate dropping to a low of 40-50%. Demand side, downstream operating aluminum capacity remained stable at high levels, forming rigid demand for aluminum fluoride.

Brief comment: This week, aluminum fluoride raw material costs overall continued to fluctuate upward. Although aluminum hydroxide prices weakened somewhat, sulphuric acid prices surged significantly and repeatedly hit new highs, with continuously rising costs notably intensifying production and operational pressure on enterprises. Although aluminum fluoride prices were already raised substantially at the beginning of the month, core raw materials such as fluorite and sulphuric acid remained in an upward trend, with cost transmission experiencing phased lag. Enterprises had limited room for profit recovery, and production-side pressure remained prominent. Sulphuric acid prices were raised again during the week, hitting new highs and driving aluminum fluoride production costs to climb in tandem. Supported by strong costs, recent aluminum smelter tender prices rose significantly to 11,500-11,800 yuan/mt. Going forward, close attention should be paid to the trends in upstream raw material costs and marginal changes in the procurement pace of downstream aluminum enterprises.