SHANGHAI, Apr. 25 (SMM) – As prices of dry-processed aluminum fluoride drop as much as RMB 800/mt starting from March, and plunges by nearly RMB 1,500/mt since December, producers are jointly suspending production in a bid to curb the downside run, an SMM survey shows. Several producers say they are already running at loss due to present low prices.

Production has already halted at some producers in Henan, Anhui, Jiangxi and Shandong. A Jiangxi-producer with an annual capacity of 15,000 mt said it is consuming existing stocks while facilities are being maintained. When to resume production has yet to be determined by future demand and prices, according to the producer. Given relatively stable raw material prices, falling prices are mainly the result of over capacity, said a Shandong-based fluoride producer.

Aluminum fluoride is an important input for aluminum production. To produce 1 mt of aluminum needs to consume 23 kg aluminum fluoride. That means an annual aluminum fluoride demand of 437,000 mt given China’s total aluminum capacity of 19 million mt in 2011. As the nation’s aluminum capacity continues to expand, aluminum fluoride demand will also expand. Therefore those producers’ production suspension will effectively limit the downward space of aluminum fluoride prices, if not help the latter rebound.