Raw Material Slump Hard to Resist: Aluminum Fluoride Prices "Dive" in May, Nearing Cost Red Line [[SMM Weekly Review of Fluoride Salts]]

SMM May 8 News:

This week, the tender prices for aluminum fluoride were finalised by downstream benchmark enterprises. Affected by the continuous weakening of the raw material market, the cost support for aluminum fluoride significantly weakened, driving a sharp decline in prices in May. As of now, SMM aluminum fluoride prices closed at 9,800-10,100 yuan/mt, while SMM cryolite was quoted at 6,900-7,700 yuan/mt.

From the perspective of raw material supply, the fluorite market continued to be sluggish during the week. On the supply side, restrictions on mining and low inventory provided a certain resilience against price drops. On the demand side, due to weak end-use consumption, high-priced fluorite faced significant procurement resistance. Downstream enterprises generally adopted a wait-and-see strategy, leading to intense bargaining and strong demands for price reductions, resulting in persistently sluggish market transactions. Under the continuous tug-of-war between supply and demand, the price center of fluorite accelerated its downward movement, and the weak market pattern was unlikely to change in the short term. According to the latest SMM data, the current average delivery-to-factory price of 97% fluorite powder is 3,583 yuan/mt, a decrease of 1.15% compared to before the holiday. In addition, aluminum hydroxide prices remained stable with a slight increase this week. SMM data showed that the ex-factory average price of aluminum hydroxide was 1,874 yuan/mt, up 0.11% from before the holiday. Meanwhile, sulphuric acid prices also continued to weaken. Overall, the cost support for aluminum fluoride's raw material side continued to decline.

After the tender pricing for aluminum fluoride in May was finalised, product prices continued to decline and approached the cost red line, significantly compressing corporate profit margins. Affected by the profit-driven mechanism, the willingness of enterprises in the industry to operate significantly decreased, with capacity utilisation rates remaining low. The market supply side presented a conservative pattern of "producing based on sales and cautious production scheduling," lacking growth momentum in supply scale in the short term, and would continue to remain stable at a low level. On the demand side, despite the regional structural adjustment of capacity in the aluminum industry (such as the southward shift of capacity in Shandong), the total national capacity scale remained stable, failing to form a substantial boost to the demand for aluminum fluoride. Downstream enterprises, based on cost control and market wait-and-see sentiment, generally adopted a just-in-time procurement strategy. The demand side lacked upward breakthrough momentum, and the overall market presented a stalemate with weak supply and demand.

Brief Commentary: Currently, downstream benchmark enterprises in the aluminum industry have completed tender pricing. In May, aluminum fluoride prices significantly fell to 9,800-9,900 yuan/mt, a decrease of 700-900 yuan/mt from the previous month. The current aluminum fluoride market presents a typical pattern of weak supply and demand. Cost-side raw material prices such as fluorite and sulphuric acid continue to bottom out, weakening price support. On the supply side, enterprises are cautious about operating, and market supply remains low. On the demand side, procurement in the aluminum industry is conservative, lacking growth momentum. Under the combined effects of multiple factors, aluminum fluoride market prices in May are expected to fall. With the tender pricing finalised, the market price trend is becoming clearer.In the short term, the aluminum fluoride market will continue to operate steadily at a low level, and improvement in the supply-demand pattern still awaits a substantive recovery in downstream demand.