High Raw Material Costs Provide Support, Aluminum Fluoride Prices Remain Stable but Slightly Weak [SMM Fluoride Salts Weekly Review]

SMM April 23:

Trading activity among China's aluminum fluoride enterprises cooled this week, with aluminum fluoride prices holding steady. As of now, SMM aluminum fluoride prices closed at 10,980-11,900 yuan/mt; cryolite prices remained stable, with SMM cryolite quoted at 7,000-8,500 yuan/mt.

Raw material side: Prices of core raw materials for aluminum fluoride diverged, but overall cost support remained relatively firm. This week, delivery-to-factory prices of 97% fluorite powder in China held steady, with mainstream transaction range at 3,300-3,550 yuan/mt and significant regional price spreads. Northern mining areas quoted lower, while southern main production areas maintained high prices supported by tightening supply. In terms of supply, safety inspections in China's main production areas continued to tighten, compounded by the impact of earlier safety accidents. Mines and beneficiation plants in south China maintained low operating rates, market supply circulation was tight, and the overall pattern showed rigid contraction with strong spot support. Demand side, downstream hydrofluoric acid enterprises saw profit margins squeezed by high-priced sulphuric acid, with most enterprises restocking on an as-needed basis and limited willingness to chase higher prices in bulk. Considering supply-demand fundamentals and cost transmission logic, SMM expects the fluorite market to hold up well in the short term, more likely to rise than fall. Aluminum hydroxide prices were under pressure, with the current SMM weighted average price at 1,667 yuan/mt, down 2.06% WoW. The sulphuric acid market performed strongly as Middle East tensions disrupted raw material sulphur circulation, which was tight, coupled with firm downstream demand, keeping sulphuric acid prices hovering at highs. Overall, aluminum fluoride raw material prices stabilized, but production pressure on enterprises persisted.

The supply side exhibited a negative cycle of rigid cost increases—deeply squeezed profitability—low willingness to operate. Recently, prices of core raw materials such as fluorite, sulphuric acid, and aluminum hydroxide diverged, but the overall raw material cost center lingered at highs. Production pressure on aluminum fluoride enterprises remained unrelieved, 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 40-50%. Demand side, downstream operating aluminum capacity remained stable at highs, providing rigid floor demand for aluminum fluoride.

Brief comment: The aluminum fluoride market operated steadily overall this week, with prices maintaining the level after the mid-month raise. Raw material side, fluorite prices were stable, sulphuric acid prices fluctuated at highs, and only aluminum hydroxide prices softened slightly. Overall raw material costs remained elevated, continuing to exert significant operational pressure on producers. The supply side was suppressed by high costs, with industry operating rates staying low and overall output unlikely to see notable increases. The demand side relied on rigid aluminum demand to support overall procurement, but downstream enterprises had limited ability to absorb costs, with upward transmission impeded and unable to effectively digest continuously rising comprehensive production costs. Most enterprises remained in a loss-making state. Currently, key raw materials such as fluorite and sulphuric acid remain on a strong trend, but cost pass-through has a lag effect, making it difficult for the industry to restore profitability. The aluminum fluoride industry continues to operate in a weak pattern characterized by high costs, low profits, and low operating rates. The tug-of-war between sellers and buyers is intensifying, and the situation of short-term losses and negative industry operations remains difficult to alleviate.