Strong Raw Material Market Support Boosts Expectations for Aluminum Fluoride Price Increase in November [SMM Analysis]

SMM News on October 31:

In October, aluminum fluoride prices stopped falling and rose, supported by the cost side. So far, the SMM aluminum fluoride price closed at 10,060–10,350 yuan/mt, while the SMM cryolite price was quoted at 7,400–9,500 yuan/mt.

Cost side, the delivery-to-factory price of 97% fluorite concentrate for aluminum fluoride enterprises currently mostly ranged from 3,450 to 3,650 yuan/mt. Since October, fluorite prices continued their upward trend driven by both cost support and supply-demand mismatch. However, as prices climbed to high levels, purchase willingness among downstream enterprises weakened, market activity declined, and prices showed slight softening. Nevertheless, the approaching winter has intensified expectations of tight supply, which will provide some bottom support for fluorite prices. At the same time, influenced by falling hydrogen fluoride prices in the downstream sector, a wait-and-see sentiment has emerged on the demand side, and purchase willingness has decreased, further contributing to the softening of fluorite prices. Therefore, SMM expects fluorite prices to fluctuate at highs in the short term, while the medium and long-term upward trend remains. According to SMM data, as of October 31, the average delivery-to-factory price of SMM 97% fluorite concentrate reached 3,567 yuan/mt, up 0.25% from September 30.

In contrast to fluorite, the market performance of aluminum hydroxide, another core raw material for aluminum fluoride, has been less satisfactory. Affected by weaker alumina prices, aluminum hydroxide prices continued to decline in October. As of October 31, the average ex-factory price of aluminum hydroxide tracked by SMM was 1,785 yuan/mt, down 4.44% from September 30. Additionally, the sulfuric acid market showed relatively strong performance due to tightening supply and solid cost support. Overall, although aluminum hydroxide prices fell, the aluminum fluoride cost side still experienced some increase, boosted by rising prices of fluorite and sulfuric acid.

Supply side, aluminum fluoride enterprises’ production enthusiasm has declined under dual pressures of limited profit margins and high operating costs. At the same time, enterprise inventory remains low, and overall market supply elasticity is limited. Demand side, operating aluminum capacity downstream remains basically stable, with demand still primarily rigid.

Brief Comment: Cost side, rising fluorite and sulfuric acid prices form the core support for aluminum fluoride prices. Although the price of raw material aluminum hydroxide continues to weaken, the price increases of fluorite and sulfuric acid still provide strong support for the overall production cost of aluminum fluoride. Coupled with enterprises' reduced willingness to operate due to cost pressures, this further lays the foundation for price increases. Market expectations indicate that companies currently have a strong inclination to push prices higher. Under high cost pressures, aluminum fluoride prices are expected to have sufficient upward momentum in November. However, the final extent of the increase will depend on the pricing situation in downstream aluminum enterprise tenders.