Aluminum fluoride prices lack effective support amid weak supply and demand [SMM Weekly Review of Fluoride Salts]

SMM News on July 24:

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 9,600-9,800 yuan/mt, and SMM cryolite quotes stand at 7,500-9,500 yuan/mt.

From the raw material perspective, the fluorite market has transitioned smoothly this week. Currently, the operating rate of mines in the north is moderate, and combined with supplementary imported supplies, the market supply side is relatively abundant. On the demand front, downstream core sectors (such as refrigerants and hydrogen fluoride) have been affected by weak industry cycles or end-use demand (e.g., refrigerant demand from downstream sectors like air conditioning and new energy). Procurement is mainly based on "restocking as needed," with strong cautious sentiment and low acceptance of high-priced supplies. In the short term, due to the high willingness to refuse to budge on prices supported by supply-side costs, and the lack of substantive recovery in downstream refrigerant and hydrogen fluoride industries, it is difficult to drive sustained price increases solely through cost support, with insufficient upward momentum. As of now, the average delivery-to-factory price of 97% fluorite powder is 3,142 yuan/mt, and prices have remained relatively stable this week. Aluminum hydroxide prices, supported by the increase in alumina prices, have continued to rise this week, with SMM recording an average ex-factory price of 2,092 yuan/mt, up 1.11% MoM. The sulphuric acid market is currently supported by rising raw material prices and is in a state of high-level, rangebound fluctuations in the short term. Overall, the aluminum fluoride raw material market is showing a steady upward trend, increasing pressure on enterprise costs.

The aluminum fluoride market currently exhibits a sluggish trend with weak supply and demand. From the supply side, enterprises are under significant production pressure: on the one hand, costs such as raw materials remain high, continuously squeezing profit margins; on the other hand, influenced by weakening profit expectations, enterprises' willingness to operate has declined significantly, leading to long-term low capacity utilization rates in the industry. Against this backdrop, most enterprises have chosen to maintain operations through production cuts, with some even entering shutdown states, resulting in a contraction in market supply scale. The demand side also lacks vitality: despite downstream aluminum enterprises maintaining relatively stable operating levels, buyers generally adopt a cautious mindset, with procurement strictly centered around actual production needs. There have been no large-scale procurement actions such as batch restocking or advance stockpiling, with overall procurement volumes maintained at just-in-time levels. Overall, the current support for aluminum fluoride prices from both supply and demand sides is relatively weak.

Brief Commentary: Recently, the aluminum fluoride raw material market has shown a trend of "steady increase," with the cost-side support for aluminum fluoride prices rising accordingly. However, in contrast, the terminal prices of aluminum fluoride have not risen in tandem—this pattern of "rising costs and stable selling prices" has directly exacerbated production pressures on enterprises. Under the pressure transmission from the production side, enterprises' willingness to resume operations has further decreased compared to the previous period, and the industry's supply scale has continued to shrink accordingly. However, there has still been no significant increase in demand on the demand side, with downstream procurement maintaining a rigid pace, failing to effectively boost the market. Overall, both the supply and demand sides of the current aluminum fluoride market lack the momentum to drive prices upward: the supply contraction has not formed a price increase support due to "scarcity," and the mediocre demand also makes it difficult to provide upward momentum for prices, resulting in insufficient overall market vitality. Considering the short-term market fundamentals, it is expected that aluminum fluoride prices will remain stable with no significant fluctuations for the time being.