The pattern of weak supply and demand for aluminum fluoride continues, with cost support and stable prices coexisting [SMM Weekly Review of Fluoride Salts]

SMM News on May 22:

This week, aluminum fluoride enterprises have focused on fulfilling orders, with aluminum fluoride prices remaining stable. As of now, SMM aluminum fluoride prices have closed at 9,800-10,100 yuan/mt, while SMM cryolite is quoted at 7,200-7,900 yuan/mt.

From the perspective of raw material supply, the raw material side has shown a divergent trend. The fluorite market has continued to slump, with intensified pressure on the supply side. As temperatures rise, enterprises in the north have gradually resumed production, and a large influx of low-priced foreign trade goods has flooded the market, leading to a significant YoY increase in market supply. However, restrictions on mining and low inventory levels have provided support, resulting in an intense tug-of-war between sellers and buyers. On the demand side, end-use consumption has been weak, with downstream enterprises exhibiting strong wait-and-see sentiment. Bargaining and price-driving efforts have been evident, and market transactions have been sluggish. Fluorite prices have continued to decline, with the average delivery-to-factory price of 97% fluorite powder at 3,533 yuan/mt, down 1.17% WoW. In contrast, aluminum hydroxide prices have surged due to the rise in alumina prices, with the ex-factory average price reaching 1,958 yuan/mt, up 4.09% WoW. Sulphuric acid prices have fluctuated at highs. Overall, the production cost of aluminum fluoride has shown an upward trend.

On the supply side, due to the decline in aluminum fluoride prices, the profit margins of enterprises have been severely squeezed. This has significantly reduced the industry's enthusiasm for production, with the capacity utilisation rate remaining at a low level for an extended period. Market supply has been sales-oriented, with cautious production scheduling. In the short term, the growth of supply scale has been sluggish, and it is expected to remain stable at a low level for an extended period. Despite regional adjustments in the aluminum industry, such as the southward shift of production capacity in Shandong, the total national production capacity has remained stable, failing to substantially boost the demand for aluminum fluoride. Downstream enterprises, driven by cost control and wait-and-see market sentiment, have currently adopted a just-in-time procurement strategy. It is difficult for the demand side to achieve breakthroughs, and the market has fallen into a stalemate of weak supply and demand.

Brief Commentary: The current aluminum fluoride market continues to exhibit weak supply and demand, with prices remaining stable during the week. Rising costs of aluminum hydroxide and sulphuric acid on the cost side have pushed up production costs. On the supply side, conservative production scheduling has been maintained due to profit squeezes. On the demand side, procurement in the aluminum industry has been mainly for just-in-time needs. The overall market lacks growth momentum, and it is unlikely that the market landscape will change significantly in the short term.