The Cost Center Continues to Shift Downward, Aluminum Fluoride Prices Still Face Downward Pressure in the Short Term [SMM Analysis]

SMM, February 10: During the January cycle (January 7-February 7), the aluminum fluoride raw material market softened, coupled with weak downstream demand, leading to a significant decline in aluminum fluoride prices. As of now, SMM aluminum fluoride prices closed at 11,200-12,500 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 3,450-3,800 yuan/mt. During the cycle, fluorite prices increased slightly overall. Although the market fluctuations were relatively small, the operating rates of miners and beneficiation plants gradually decreased, and supply was constrained by environmental protection policies and the upcoming National People's Congress and Chinese People's Political Consultative Conference. This limited the supply of fluorite. Coupled with a slight recovery in downstream hydrogen fluoride enterprises, fluorite powder prices remained relatively firm. Currently, SMM recorded the average delivery-to-factory price of 97% fluorite powder at 3,617 yuan/mt, up 0.23% from January 7. Additionally, SMM learned that the prices of other raw materials for aluminum fluoride, such as aluminum hydroxide, continued to weaken during the cycle. Currently, SMM recorded the ex-factory average price of aluminum hydroxide at 2,435 yuan/mt, down 31.49% from January 7. The significant softening of raw material prices on the cost side weakened support for aluminum fluoride. From the supply perspective, during the cycle, the significant decline in aluminum fluoride prices severely impacted the profitability of many enterprises, with some even experiencing negative profits. To cope with this situation, enterprises opted for production halts and maintenance to reduce operating costs and losses, which also led to a reduction in supply. After entering February, with the end of the Chinese New Year holiday, some enterprises gradually resumed production, and supply recovered compared to the pre-holiday period. From the demand perspective, although the operating capacity of aluminum increased slightly, some enterprises had already completed inventory stocking before the holiday, leaving overall market demand relatively weak. Brief Comment: During the cycle, transaction activity among aluminum fluoride enterprises was relatively subdued, with enterprises mainly focusing on fulfilling orders, and market activity remained insufficient. Although the supply side of aluminum fluoride has shown some recovery, the weak demand situation is unlikely to reverse quickly, and the mixed trends on the cost side have introduced some uncertainty. However, as the market gradually digests previous inventories, enterprises resume production, and potential changes in demand emerge, SMM expects that aluminum fluoride market prices will still face downward pressure in the short term.