Fluorite Rebound and High Sulphuric Acid Prices Support Aluminum Fluoride Costs, September Prices Show Upward Trend but Limited by Downstream Aluminum Producers' Efforts to Drive Down Prices [SMM Analysis]

SMM August 31 News:

Aluminum fluoride prices continued to weaken in August. As of now, SMM aluminum fluoride prices closed at 9,500-9,800 yuan/mt, while SMM cryolite prices were quoted at 7,500-9,500 yuan/mt.

On the raw material side, recent developments in the fluorite market have drawn significant attention. Currently, the delivery-to-factory price of 97% fluorite powder for aluminum fluoride producers mostly ranged between 3,100-3,300 yuan/mt. Entering August, the fluorite market reversed its previous downtrend and bottomed out. As winter approaches, mining operations face greater challenges. Factors such as low temperatures and complex terrain not only increase the difficulty of extraction but also significantly raise mining costs. Meanwhile, downstream enterprises, concerned about potential supply fluctuations during winter, have initiated winter stockpiling plans. The dual stimuli of rising mining costs and downstream winter stockpiling demand have intensified market hoarding and reluctance to sell. Under this supply-demand pattern, fluorite prices have gained strong support, showing a "more likely to rise than fall" trend in the short term, with slight rebounds already observed in some regions. According to SMM data, as of August 29, the average delivery-to-factory price of 97% fluorite powder reached 3,192 yuan/mt, up 1.59% MoM. In contrast, the market performance of aluminum hydroxide, another core raw material for aluminum fluoride, has been mediocre. Affected by declining alumina prices, aluminum hydroxide prices fluctuated downward in August. As of August 29, the average ex-factory price of aluminum hydroxide stood at 2,059 yuan/mt, down 1.57% MoM. Additionally, sulphuric acid prices remained high. Overall, despite the drop in aluminum hydroxide prices, rising fluorite prices and persistently high sulphuric acid levels have strengthened cost support for aluminum fluoride.

Supply side, aluminum fluoride producers currently operate with thin profit margins, most barely breaking even, keeping production under significant pressure. Operating rates showed marginal improvement MoM, with some previously idled plants resuming production due to improved profitability or completed maintenance, leading to ample market supply. Demand side remained subdued. Although operating rates in the core downstream aluminum sector stayed high with slight growth, theoretically supporting aluminum fluoride demand, actual procurement remained cautious, strictly aligned with immediate production needs without generating additional demand. Balancing both supply and demand, while operating rates rebounded, producer profitability remained constrained, and downstream procurement stayed conservative, resulting in weak positive price support for aluminum fluoride.

Brief Comment: The September tender for benchmark downstream aluminum enterprises remains undetermined. Although there is no clear support from both supply and demand sides in the aluminum fluoride market, the strong support from fluorite—a core raw material for aluminum fluoride—has recently dominated, coupled with the auxiliary effect of sulphuric acid fluctuating at highs. Even with a slight weakening in aluminum hydroxide prices, overall raw material costs still show a modest upward trend, which may continue to provide cost support for aluminum fluoride production. Amid mounting cost pressures, production pressures on enterprises are intensifying. With cost-side support, aluminum fluoride prices are expected to rise in September, but the evident price-driving sentiment among downstream aluminum enterprises has somewhat constrained the upward movement of aluminum fluoride prices. Overall, the aluminum fluoride market in September will be caught in a tug-of-war between "cost support driving bullishness" and "downstream price pressure limiting gains," making a significant price surge unlikely.