Upstream Raw Materials Diverge, Aluminum Fluoride Prices Hold Steady in Short-Term Stalemate [SMM Fluoride Salt Weekly Review]

SMM, August 13:

This week, trading sentiment among domestic aluminum fluoride enterprises was moderate, and aluminum fluoride prices remained stable. As of this report, SMM mainstream aluminum fluoride quotations stood at 11,200-11,800 yuan/mt; cryolite spot prices held steady, and SMM cryolite quotations were 7,500-9,000 yuan/mt.

Raw material side: This week, aluminum fluoride raw material prices diverged. The upstream 97% fluorite wet powder market consolidated on a strong note, with mainstream delivered prices at 3,300-3,750 yuan/mt. Supply side, domestic mine safety supervision tightened, standardized mining management and control was implemented, and mine technological transformation and rectification cycles lengthened, constraining the release of effective industry capacity over the long term. Some mines in Inner Mongolia stopped production for rectification, most mines in the main producing areas of south China had not yet resumed production, spot cargo circulation in the market was tight, and although imported cargo from Mongolia could ease some supply pressure, the extent was limited. Demand side, downstream hydrogen fluoride enterprises maintained moderate rigid-demand restocking, but wait-and-see sentiment gradually emerged in the terminal fluorochemical market. Combined with steady consumption from the aluminum sector providing a floor, fluorite prices maintained a stable-to-rising pattern amid the tug-of-war between sellers and buyers. Other raw materials, the domestic aluminum hydroxide market drifted lower, with a weighted average price of 1,660 yuan/mt, down 0.60% WoW; the sulphuric acid market loosened from high levels, with transaction centers shifting slightly lower. After the gains and losses among raw materials offset each other, overall aluminum fluoride production costs stayed high.

Supply side: The industry remained caught in a negative loop of high costs, production losses, and low operating rates. Rising fluorite prices further intensified enterprises' losses. Although product negotiation prices picked up somewhat in August, industry profitability was not meaningfully repaired. Most enterprises stepped up equipment maintenance and flexible production cuts, and overall operating rates continued to decline. At this stage, most enterprises in the market were adopting a contractionary operating strategy, prioritizing delivery of long-term contract orders. Incremental effective supply in the market was limited, and spot cargoes were tight overall.

Demand side: Downstream aluminum industry operating capacity remained high, providing rigid demand support for aluminum fluoride and underpinning the market bottom. However, aluminum smelters were cautious and conservative in overall purchasing sentiment, mostly making sporadic restocking purchases for rigid demand. Sentiment for pushing for lower prices and waiting on the sidelines was strong, and there were no concentrated restocking or incremental procurement activities, making it difficult to drive market prices upward.

Comment: This week, aluminum fluoride raw material trends continued to diverge. Fluorite prices rose sharply, raising the cost floor, while aluminum hydroxide and sulphuric acid prices pulled back slightly, partly offsetting cost pressure. The industry's overall production costs remained high, profit margins were difficult to repair, and production enthusiasm stayed weak. In August, the aluminum fluoride tender price of the benchmark aluminum enterprise was raised by 250 yuan/mt MoM. Upstream and downstream enterprises followed suit with price increases. Market prices stabilized for now, lacking one-sided trend drivers. Transactions were mostly small rigid-demand restocking orders. Aluminum fluoride prices are expected to remain in a stable stalemate pattern in the short term, with limited price movement. Going forward, close attention should be paid to raw material cost-side dynamics and marginal adjustments in downstream aluminum enterprises' procurement pace.