Decline in raw material costs fails to change the supply and demand stalemate; aluminum fluoride prices remain in the doldrums in the short term [SMM Weekly Review of Fluoride Salts]

SMM News on June 26:

This week, aluminum fluoride enterprises focused on fulfilling orders, with mediocre market transactions. Aluminum fluoride prices remained stable. As of now, SMM aluminum fluoride prices closed at 9,630-9,900 yuan/mt, and SMM cryolite was quoted at 7,500-9,500 yuan/mt.

From the perspective of raw material supply, the current raw material market is mainly characterized by weakness, with continuous relief of cost-side pressure. The fluorite market remains in a slump. Affected by the increase in operating rates of mines in the north, the originally tight supply situation of fluorite powder has eased. Coupled with the supplement of imported goods, the market supply side is relatively abundant. On the demand side, hydrofluoric acid prices continue to decline, and enterprises have extremely low enthusiasm for purchasing high-priced fluorite. Most enterprises only maintain just-in-time procurement, and some small and medium-sized hydrofluoric acid plants have even suspended fluorite procurement. The market is in a wait-and-see atmosphere, and fluorite prices lack upward momentum in the short term. It is expected to continue the weak downward trend. As of now, the average delivery-to-factory price of 97% fluorite powder is 3,275 yuan/mt. Prices continued to be weak this week, down 0.76% MoM. In addition, the market for other raw materials of aluminum fluoride showed a steady downward trend. Affected by the loosening of alumina prices, aluminum hydroxide prices continued to weaken this week, with an average ex-factory price of 2,028 yuan/mt, down 1.98% MoM. Sulphuric acid prices mainly fluctuated at highs. Overall, the production cost of aluminum fluoride showed a downward trend.

Affected by the continuous pressure on profits, the production enthusiasm of aluminum fluoride enterprises has been frustrated, and the capacity utilization rate has been hovering at a low level for a long time. Despite the good operating situation of downstream aluminum enterprises on the demand side, procurement sentiment is generally average, mainly focusing on maintaining just-in-time procurement. Therefore, the support for aluminum fluoride prices from both supply and demand sides is relatively limited.

Commentary: Currently, the overall operating rate of the aluminum fluoride industry is relatively low, providing certain support for prices. However, due to the persistent high prices of sulphuric acid and the continuous price-driving efforts of aluminum enterprises, the risk of losses still exists, and enterprises lack the motivation to raise prices. In the short term, the industry's slump is difficult to change. Cost pressure and a weak balance between supply and demand are intertwined. The market lacks the core driving force to break the deadlock, and the room for improvement is limited. Aluminum fluoride prices will mainly remain weak and stable.