SMM, August 31:
Supported by a rigid cost-side floor and the industry’s low supply pattern, together with a boost to sentiment across the industry chain from successive increases in hydrofluoric acid long-term contract prices, aluminum fluoride prices extended their rise in August. As of month-end, SMM aluminum fluoride quotes were 11,200-11,800 yuan/mt. Supported by higher costs and improving domestic and overseas demand, cryolite consolidated on a strong note, with quotes at 7,500-9,000 yuan/mt.
Cost side: Fluorite led the gains and dominated the cost upturn, while declines in aluminum hydroxide and sulphuric acid provided only a limited offset.
Fluorite prices remained strong in August. On the supply side, high-pressure mine safety inspections remained intense. Inner Mongolia’s main production areas implemented the “Double Ten” inspections; Zhejiang advanced full-process mechanization upgrades at mines and planned to shut down underground mines with capacity below 30,000 mt/year by the end of 2026, while production resumption at some mines was delayed. Compliance inspections on mining continued in Jiangxi and Fujian; enterprises’ finished product inventories remained at year-to-date lows, and spot supply was tight overall, with cargoes prioritized for long-term contract clients. Although imports from Mongolia rebounded, they were constrained by border port clearance efficiency and transportation capacity, providing only a small supplement to parts of northern China. On the demand side, spot supply of hydrofluoric acid contracted and quotes moved higher, and the September long-term contract price was further raised to above 15,000 yuan/mt. Phased restocking by loss-making enterprises to cover rigid demand provided a small boost to fluorite purchases. In the peak season for refrigerants, operating rates, constrained by quotas, were only around 60%, while the lithium battery industry chain remained under pressure. Downstream acceptance of high-priced fluorite weakened, with purchasing mainly on a hand-to-mouth basis, and fluorite shifted to high-level, narrow-range consolidation on a strong note. As of August 31, the SMM average delivery-to-factory price of 97% fluorite powder was approximately 3,467 yuan/mt, up 3.25% from the end of July.
Aluminum hydroxide followed alumina prices lower and came under pressure. The SMM alumina index fell below 2,680 yuan/mt by month-end, weighing on aluminum hydroxide and sending it lower amid consolidation. As of month-end, its average ex-factory price was 1,650 yuan/mt, down 1.79% from the end of July.
Sulphuric acid: falling sulphur prices, coupled with recovering supply and weak demand, pushed the market down sharply from earlier highs. It gradually stabilized late in August, and downward pressure is expected to ease in September, with attention focused on the pace of autumn fertilizer restocking and sulphur price trends.
Overall, raw material trends for aluminum fluoride diverged in August. The sharp rise in fluorite continued to firm up the cost floor, while declines in aluminum hydroxide and sulphuric acid only partially offset the pressure, further raising the industry’s overall production costs.
Supply-demand side: Losses suppressed operating rates, keeping them low, while August tender price increases drove a recovery in sentiment.
Supply side, the cycle of “high costs—deep losses—low operating rates” continued, with price inversion still prominent and no substantive improvement in enterprise losses. Driven by August tender price increases, the market recovered marginally. Operating rates edged up from earlier levels but remained at mid-to-low levels overall. The market mainly executed earlier long-term contracts, with almost no new production schedules; available spot cargoes remained tight, and effective supply growth was limited. Demand side, downstream operating aluminum capacity stayed high and stable, providing rigid support for aluminum fluoride.
Brief comment: In August, fluorite prices firmed and moved higher, further lifting the cost center. The pullback in aluminum hydroxide and sulphuric acid prices only offset part of the pressure. Industry-wide comprehensive costs remained high and difficult to bring down, while enterprise profit recovery was limited and willingness to operate remained subdued. Recently, with a new round of tender pricing approaching, bullish sentiment in the market gradually strengthened. However, aluminum producers still mainly made just-in-time procurement to restock, with limited willingness to stockpile in bulk. Supported by rigid cost support and a low-supply pattern, combined with the upcoming new round of tender pricing in September and the sentiment boost from successive increases in hydrofluoric acid long-term contract prices, aluminum fluoride prices are expected to consolidate on a strong note in September. However, with downstream aluminum producers pushing for lower prices and making just-in-time procurement, upside room is relatively limited.
