SMM, Jan 30:
In January, aluminum fluoride prices edged up, supported by strong cost-side sulfuric acid prices. During the month, SMM aluminum fluoride prices closed at 10,750-11,060 yuan/mt, while the cryolite market remained stable overall, with SMM cryolite quotes holding steady at 7,000-9,000 yuan/mt.
On the raw material side, fluorite prices were in the doldrums in January. Supply-side, conventional shutdowns in north China due to low temperatures and the Chinese New Year holiday led to a decline in market supply; coupled with normalized environmental and safety supervision, small and medium-sized mines experienced unstable operations. Imports were mainly medium and low-grade, with limited high-grade supply, sustaining structural tightness. Although supply contracted, high social inventory and sluggish sales exerted some downward pressure on prices. Demand-side performance was weak, with core downstream hydrofluoric acid industry operating rates remaining low, resulting in weak digestion capacity for fluorite powder and failing to provide strong momentum. According to SMM data, as of Jan 30, the average delivery-to-factory price for SMM 97% fluorite powder reached 3,258 yuan/mt, down 0.76% from Dec 31. As another key raw material for aluminum fluoride, the aluminum hydroxide market performed weakly. As of Jan 30, the average ex-works price for aluminum hydroxide tracked by SMM was 1,611 yuan/mt, down 3.88% from Dec 31. Additionally, the sulfuric acid market hovered at highs due to tightening supply and strong cost support. Overall, although declining fluorite and aluminum hydroxide prices weakened the marginal cost support for aluminum fluoride, high sulfuric acid prices provided an effective floor, maintaining rigid raw material costs and significantly limiting the room for profit recovery in the industry.
Supply side, lower raw material prices effectively alleviated some cost pressure for enterprises. However, due to strict environmental and energy consumption policies, dual constraints of raw material costs and profit margins, and maintenance and production cuts at some enterprises, industry supply declined. Demand side, downstream operating aluminum capacity remained largely stable, providing solid rigid demand support for aluminum fluoride, but enterprises adopted a cautious procurement approach, mainly restocking as needed.
Brief Comment: Cost side, marginal weakening slightly alleviated production pressure for enterprises, but overall costs remained high, keeping corporate profits under pressure. Current market trading is sluggish with insufficient transaction volumes, downstream aluminum enterprises primarily make just-in-time procurement, with a notable tendency to push for lower prices, further suppressing price rises. Overall, aluminum fluoride fundamentals failed to provide effective support for prices; cost loosening coupled with weak supply-demand dynamics led to downward pressure on prices next month. According to an SMM survey, the tender price for aluminum fluoride at a large aluminum enterprise in Shandong was lowered by 200 yuan/mt MoM, which holds significant guidance for the market. The market is closely watching for the release of tender prices from another benchmark enterprise, but the trend of aluminum fluoride prices shifting from increase to decline in February has been clearly established.
