Raw Material Divergence and High Costs: Aluminum Fluoride in Low Operating Rate and Stable Price Stalemate [SMM Fluoride Salts Weekly Review]

SMM, May 14:

This week, trading activity among China's aluminum fluoride enterprises was moderate, with aluminum fluoride prices remaining stable. As of now, SMM aluminum fluoride prices closed at 11,480-12,000 yuan/mt. Cryolite prices also remained stable, with SMM cryolite quoted at 7,000-8,500 yuan/mt.

Raw material side: Prices of core raw materials for aluminum fluoride showed mixed performance, while overall cost support remained relatively firm. This week, delivery-to-factory prices of 97% fluorite powder in China remained stable in a transitional pattern, with mainstream transactions in the range of 3,200-3,500 yuan/mt and notable regional price spreads persisting. Supply side, operating rates in northern producing areas rebounded steadily, coupled with continued arrivals of Mongolian imports at ports, further easing overall market supply. As a result, high-priced cargoes faced notable pressure on transactions, and some traders remained willing to cut prices to ship out goods in order to recoup funds. Demand side, wait-and-see sentiment in the downstream market had yet to dissipate after the holiday, with insufficient momentum for new orders. Enterprise procurement mainly focused on digesting earlier contract orders, and spot trades remained sluggish. Although rising hydrofluoric acid prices provided sentiment support for fluorite, and delayed resumption of mining operations in Zhejiang along with locally low inventory levels still offered some support, the combination of ample supply and sluggish spot trades kept the overall market in the doldrums with slight weakness. Aluminum hydroxide prices edged down slightly, with the current SMM weighted average price at 1,656 yuan/mt, down 0.24% WoW. The sulphuric acid market continued to rise. Currently, raw material sulphur supply remained tight with prices continuing to climb. Supply side, some enterprises halted for maintenance, tightening supply, while demand gradually weakened. Overall, sulphuric acid prices hovered at highs, and the market remained relatively strong. In summary, prices of core raw materials for aluminum fluoride showed mixed performance, with the overall cost center fluctuating at highs, and production pressure on enterprises remained difficult to alleviate.

The supply side exhibited a negative cycle of rigid cost increases, deeply pressured profitability, and low willingness to operate. Recently, overall raw material costs for aluminum fluoride remained elevated, with the industry mired in deep losses and cost inversion. Enterprise production enthusiasm was significantly dampened, and the industry's overall operating rate dropped to a low of around 40%. Demand side, downstream operating aluminum capacity remained stable at high levels, providing rigid floor demand for aluminum fluoride.

Brief comment: This week, raw material prices in the aluminum fluoride market showed mixed performance, but comprehensive calculations indicated that raw material costs remained in a high range, significantly suppressing operating profits for producers. The industry overall maintained a "triple pressure" pattern of high costs, low profits, and low operating rates, making it difficult to effectively boost production enthusiasm among enterprises. Overall, the market currently lacked clear trend-driven factors for price movements, with a stalemate in the tug-of-war between sellers and buyers. Transactions were dominated by rigid demand, and wait-and-see sentiment was relatively strong. In the short term, prices were expected to remain stable, with limited room for wild swings. Going forward, it is necessary to continue closely monitoring the dynamic changes on the raw material cost side, as well as the marginal adjustments in the procurement pace of downstream aluminum enterprises.