Aluminum Fluoride Prices Consolidate Amid High Raw Material Costs and Weak Downstream Demand [SMM Analysis]

SMM June 30 news:

At end-May, cost support for aluminum fluoride weakened, with diverging and softening raw material prices eroding the market’s cost floor. Combined with persistently sluggish downstream demand, this curbed upward price momentum. Led by tender price cuts from benchmark enterprises, China’s aluminum fluoride prices pulled back overall in June amid consolidation. As of June 30, SMM assessed aluminum fluoride market prices at 11,280-11,700 yuan/mt; the cryolite market was generally stable with slight firmness, with a modest improvement on the demand side. SMM assessed cryolite prices at 7,000-9,000 yuan/mt.

In June, China’s fluorite market prices mainly consolidated within a range. Supply side, nationwide special inspections on mine safety production continued to intensify, and previous safety accidents had triggered a comprehensive regulatory upgrade, significantly tightening industry safety control standards. Several key mines in major fluorite-producing regions such as Zhejiang and Fujian temporarily halted production for rectification and conducted safety self-assessments, with regional mine operating rates falling markedly and spot supply in the industry contracting sharply. Under the high-pressure regulatory environment, domestic miners were strongly inclined to hold prices firm and hold back from selling, keeping spot market liquidity tight. This effectively offset the supply increments from recovering operations in northern production areas and continuous arrivals of imported cargo from Mongolia. Demand side, overall continued to weaken, limiting upside room for the fluorite market. Top-tier domestic fluorine chemical enterprises simultaneously reduced production loads. Operating rates in the downstream hydrofluoric acid industry kept falling. Demand in terminal sectors such as refrigerants and fluoropolymers contracted in tandem, directly dragging down downstream procurement demand for fluorite. Meanwhile, the market had already priced in bearish off-season expectations ahead of time. The July long-term contract pricing for hydrofluoric acid was lowered by 300 yuan/mt, fully confirming the weak end-use demand in the traditional fluorine chemical sector. Overall, the fluorite market was caught in a tug-of-war between contracting supply and sluggish demand, with bullish and bearish factors offsetting each other. In the short term, prices are likely to continue moving sideways within a range. As of June 30, SMM average delivery-to-factory price for 97% fluorite powder stood at 3,250 yuan/mt, unchanged from May 29. Another key raw material for aluminum fluoride, aluminum hydroxide, held up well overall, driven by the drift higher in upstream alumina prices. As of June 30, SMM average ex-works price for aluminum hydroxide was 1,718 yuan/mt, up 3.87% from May 29. In June, China’s sulphuric acid market extended the high-level operation pattern from May, characterized by consolidation at highs, a rising price center, and intensifying regional divergence. With raw material costs underpinning at high levels, the supply-demand pattern shifting from loose to tight, and structural differentiation in demand, the market stalemate persisted, and its resilience improved markedly. Looking at the cost side broadly, raw materials for aluminum fluoride were generally firm in June: fluorite prices were stable, aluminum hydroxide drifted higher, and sulphuric acid held firm at highs. The industry’s overall cost center continued to rise.

The supply side was mired in a vicious cycle of high costs, deep losses, and low operating rates. Rising raw material prices aggravated enterprise losses, causing the loss-making scope to keep expanding. Maintenance shutdowns and flexible production arrangements became more frequent, and the overall operating rate continued to decline. It is understood that some enterprises are currently adopting conservative operating strategies, prioritizing long-term contract deliveries with virtually no new production scheduling, which limited incremental effective supply in the market. Demand side, downstream operating aluminum capacity remained high, providing a rigid demand floor for aluminum fluoride. However, aluminum smelters were cautious in procurement, mainly restocking only to meet rigid demand, pushing for lower prices, and taking a wait-and-see approach, with no incremental procurement demand released.

At end-June, trading in the aluminum fluoride market was sluggish, with the industry waiting for new long-term contract tender prices to be settled. In the short term, high raw material prices provide solid cost support for aluminum fluoride, but bearish constraints from weak downstream fluorine chemicals and the decline in long-term hydrofluoric acid contracts are also in play. Amid the tug-of-war, aluminum fluoride prices in July have little room for significant rise or fall, and the market will continue to consolidate at highs within a range.