Aluminum Fluoride Prices Remain Weak in June, Market Stuck in a Dual Weakness of Supply and Demand in the Short Term [SMM Analysis]

SMM, June 6:

Aluminum fluoride prices continued to weaken during the period from May 9 to June 6. As of now, SMM aluminum fluoride prices closed at 9,630-9,900 yuan/mt, while SMM cryolite was quoted at 7,500-9,500 yuan/mt.

Regarding fluorite, a key raw material, the current delivery-to-factory prices of 97% fluorite powder for aluminum fluoride enterprises are concentrated in the range of RMB 3,200-3,550 yuan/mt. The fluorite market remained sluggish during this period, with intense competition between supply and demand, and the price center continued to decline. On the supply side, enterprises in the north gradually resumed production as temperatures rose, coupled with a large influx of low-priced foreign trade goods into the market, resulting in a significant YoY increase in overall supply and mounting pressure on the supply side. However, limited mining activities and low inventory levels provided some support to the supply side, creating a mixed situation of bullish and bearish factors. Demand remained weak, with sluggish end-use consumption and downstream enterprises generally adopting a wait-and-see attitude. Strong demands to drive down prices led to a notably sluggish market. Affected by this, fluorite prices accelerated their decline. Despite some resistance factors on the supply side, the market's weakness is unlikely to change in the short term, and prices are expected to continue to weaken. SMM data shows that the current average delivery-to-factory price of 97% fluorite powder is RMB 3,367 yuan/mt, down 6.03% from May 9. Meanwhile, the price of aluminum hydroxide, another core raw material for aluminum fluoride, rose significantly due to factors affecting the ore end, leading to a rapid increase in alumina prices, which in turn caused a notable increase in aluminum hydroxide prices. Currently, the average ex-factory price tracked by SMM is RMB 2,131 yuan/mt, up 13.68% from May 9. In addition, sulphuric acid prices remained high, providing some increased cost support for aluminum fluoride.
The aluminum fluoride market currently exhibits a situation of weakness in both supply and demand. On the supply side, since the tender pricing for aluminum fluoride was determined in May, product prices have continued to decline, almost reaching the cost line, significantly compressing corporate profit margins. This situation has led to a decline in production enthusiasm and a prolonged sluggishness in industry capacity utilization rates. The market has adopted a strategy of "producing based on sales and cautious production scheduling," lacking motivation to expand production in the short term. It is expected that the supply scale will remain low and stable. On the demand side, although there have been regional adjustments in the aluminum industry, such as the southward transfer of production capacity in Shandong, the total national production capacity has remained basically stable, with no significant increase in demand for aluminum fluoride. Downstream enterprises, driven by cost control and a wait-and-see market sentiment, generally adopt procurement strategies that only meet basic needs, making it difficult for demand to achieve breakthrough growth.

Brief Commentary: During this period, the tender pricing for June by downstream benchmark aluminum enterprises was finalized. The market price of aluminum fluoride continued to weaken, with the tender price of benchmark enterprises in June declining by 150-200 yuan/mt to 9,630-9,700 yuan/mt. Currently, the aluminum fluoride market continues to experience weak supply and demand. After entering June, prices of both raw materials and finished products have declined, and corporate profitability has not improved. Most enterprises are experiencing losses, with low operating rates that are unlikely to increase in the short term. Coupled with the absence of positive factors on the demand side, aluminum fluoride prices are expected to remain stable in the short term. Additionally, with the anticipated decline in raw material prices in June, prices are expected to remain weak next month.