Raw Material Costs Ease and Demand Weakens: Aluminum Fluoride Prices Significantly Reduced in January 2025 [SMM Analysis]

SMM, January 7:

During the December cycle (December 6 - January 6), the aluminum fluoride raw material market showed some loosening, leading to a slight decline in aluminum fluoride prices. As of now, SMM aluminum fluoride prices closed at 12,500-13,200 yuan/mt, while SMM cryolite prices were quoted at 6,500-7,200 yuan/mt.

On the raw material side, for fluorite, the delivery-to-factory price of 97% fluorite powder for aluminum fluoride enterprises mainly ranged from 3,450 to 3,800 yuan/mt. During the cycle, fluorite prices were largely stable. Since the beginning of this year, the fluorite industry has been continuously affected by policies and other factors, resulting in insufficient mine operating rates and a supply deficit of fluorite raw materials. Additionally, with the arrival of winter, fluorite powder production in north China has declined, further exacerbating the tight supply. On the demand side, downstream enterprises showed mediocre purchasing enthusiasm, and market transactions were sluggish. Currently, SMM recorded the average delivery-to-factory price of 97% fluorite powder at 3,592 yuan/mt, remaining stable MoM. Furthermore, SMM learned that the price of another aluminum fluoride raw material, aluminum hydroxide, turned weaker at the end of December. Currently, SMM recorded the ex-factory average price of aluminum hydroxide at 3,565 yuan/mt, down 0.83% MoM. The loosening of raw material prices weakened the cost-side support for aluminum fluoride.

In terms of supply, during the cycle, with some loosening in the raw material market, the production activities of aluminum fluoride enterprises improved, and inventory increased. However, environmental protection and maintenance factors led to a decline in supply in some regions. Overall, the supply of aluminum fluoride remained relatively sufficient. On the demand side, aluminum enterprises in south-west China saw weakened demand due to rising costs and maintenance. Additionally, most enterprises had largely completed their stockpiling activities, and under the circumstances of just-in-time restocking, overall demand faced certain downward pressure.

Brief Comment: During the cycle, raw material costs loosened, and domestic aluminum fluoride market prices slightly declined. With the gradual determination of bidding prices in the aluminum industry, the benchmark aluminum bidding price for January was reduced by 1,300 yuan/mt compared to the previous level, reaching 11,200-11,300 yuan/mt. This reduction exceeded the expectations of aluminum fluoride enterprises, despite their earlier anticipation of price declines. As aluminum enterprises have recently completed sufficient stockpiling, purchasing demand weakened, and aluminum fluoride enterprises showed sluggish performance in new order negotiations. Approaching the Chinese New Year, the raw material market is expected to weaken, coupled with weak demand performance. SMM predicts that aluminum fluoride prices will remain largely stable with a weakening trend.