Divergence in raw materials coupled with weak supply and demand, prices largely stable in the short term [SMM Weekly Review of Fluoride Salts]

SMM News on June 12:

This week, aluminum fluoride enterprises have focused on fulfilling orders, with aluminum fluoride prices holding steady. 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.

From the perspective of raw material supply, the raw material market has shown slight divergence. The fluorite market remains sluggish, with the current tight supply situation in the fluorite powder market easing somewhat, coupled with the supplement of imported sources, the market supply side is relatively ample. On the demand side, end-use consumption is weak, and downstream enterprises exhibit strong wait-and-see sentiment. It is expected that fluorite prices will continue to weaken. As of now, the average delivery-to-factory price of 97% fluorite powder is 3,325 yuan/mt. Prices have remained weak this week, down 1.25% MoM. Additionally, the market trends for other raw materials of aluminum fluoride vary. Affected by the easing of alumina prices, the price of aluminum hydroxide has held steady this week, with an ex-factory average price of 2,131 yuan/mt. Sulphuric acid prices have held up well. Overall, despite the weakening of fluorite prices, the strength of sulphuric acid and the stable prices of aluminum hydroxide have kept the production costs of aluminum fluoride enterprises fluctuating at highs. Coupled with the pressure on product prices, enterprises still face significant operational and production pressures.​

Due to poor profits of aluminum fluoride enterprises, the enthusiasm for production at the supply side is low, leading to a long-term low level of capacity utilisation rate. Although the operating conditions of downstream aluminum enterprises are good on the demand side, procurement sentiment is average, mainly focusing on just-in-time procurement. Therefore, the support for aluminum fluoride prices from both supply and demand sides is relatively limited.

Brief Commentary: The current aluminum fluoride market continues to exhibit a pattern of weak supply and demand. The decline in aluminum fluoride prices and the high raw material costs have formed a dual pressure, continuously compressing the profit margins of enterprises. Even though some raw material prices have fluctuated, the overall cost support remains strong, making it difficult to alleviate the operational and production pressures of enterprises. The operating rate continues to run at a low level, lacking short-term rebound momentum. Coupled with the lack of favorable support on the demand side, it is expected that aluminum fluoride prices will mainly hold steady in the short term.