Double pressure from cost and demand makes it difficult for short-term prices to rise [SMM Weekly Review of Fluoride Salts]

SMM News on July 3:

This week, the tender prices for aluminum fluoride from downstream benchmark enterprises were finalised, with aluminum fluoride prices experiencing a slight decline. As of now, SMM aluminum fluoride prices closed at 9,600-9,800 yuan/mt, while SMM cryolite was quoted at 7,500-9,500 yuan/mt.

From the perspective of raw material supply, the current raw material market is primarily characterized by weakness, with ongoing relief of cost-side pressures. The fluorite market remains sluggish. Currently, the operating rate of mines in the north is moderate, and combined with the supplement of imported sources, the market supply side is relatively abundant. On the demand front, the price of hydrofluoric acid continues to decline, and enterprises have extremely low enthusiasm for purchasing high-priced fluorite. Most enterprises only maintain just-in-time procurement, with some small and medium-sized hydrofluoric acid plants even suspending fluorite procurement. The market is characterized by a strong wait-and-see atmosphere, and the persistent weakness of demand has left fluorite prices lacking upward momentum. As of now, the average delivery-to-factory price of 97% fluorite powder is 3,242 yuan/mt. This week, prices continued to weaken, declining by 1.01% MoM. Additionally, the market for other raw materials of aluminum fluoride is showing a steady downward trend. Affected by the loosening of alumina prices, the price of aluminum hydroxide continued to weaken this week, with an average ex-factory price of 2,019 yuan/mt, down 0.44% MoM. Sulphuric acid prices, on the other hand, primarily fluctuated at highs. Overall, the production cost of aluminum fluoride is showing a downward trend.​

Affected by the dual impact of sustained pressure on profits and high costs, the production enthusiasm of aluminum fluoride enterprises has been significantly dampened, with capacity utilization rates remaining low for an extended period. Demand side, although the operating rate of downstream aluminum enterprises remains at a relatively high level, procurement sentiment is generally cautious, primarily focusing on just-in-time procurement, without large-scale restocking behavior. Overall, the current support from both supply and demand sides for aluminum fluoride prices is relatively weak.

Brief Commentary: In recent times, the prices of raw materials such as fluorite and aluminum hydroxide have weakened, while sulphuric acid prices have remained high, leading to an overall decline in cost-side support. This week, coinciding with the monthly transition, downstream benchmark aluminum enterprises have completed tender pricing. In July, aluminum fluoride prices slightly fell to 9,600-9,670 yuan/mt, a decrease of 30 yuan/mt from the previous month. Currently, industry profitability is underperforming, with enterprises generally adopting order-based production and overall operating rates remaining low. Coupled with the unwavering mindset of aluminum enterprises to drive down prices, SMM anticipates that aluminum fluoride prices will struggle to rise in the short term.