China’s alumina and hydrochloric acid trends provide support for the PAC market

China's polyaluminium chloride (PAC) market remained stable during May. As of May 31, the mainstream market price for solid industrial-grade PAC with a content level of at least 28 per cent was around RMB 1,811.67 (USD 267.62) per tonne, unchanged from the beginning of the month.

Raw material costs provide support

Raw materials, mainly alumina and hydrochloric acid, account for more than 60 per cent of PAC production costs.

During May, the upstream electrolytic aluminium market showed fluctuating downward trends. At the same time, hydrochloric acid prices rose temporarily as chlor-alkali producers adjusted operating rates. These factors provided some cost support for PAC prices.

However, the commissioning of new alumina production capacity increased supply in the market, limiting the potential for further raw material price increases.

Demand remains weak

May is traditionally a slow season for the water treatment industry. Construction and operating activity at municipal and industrial wastewater treatment projects remained relatively low during the month.

Demand from downstream industries (like chemicals and papermaking) remains stable, with purchases mainly limited to immediate operational requirements.

Because of this, the PAC market did not see large-volume buying activity or stronger-than-expected demand growth. This reduced the possibility of significant price increases during the month.

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June outlook

Raw material costs are expected to remain relatively well supported in June. Environmental regulations are also expected to continue limiting production expansion among small and medium-sized producers, preventing any major increase in supply.

June indicates the beginning of the traditional peak season for the water treatment sector, with downstream demand expected to improve slightly. This will provide some support for PAC prices.

But with additional alumina capacity still entering the market, raw material prices have limited room for further gains. Industry overcapacity remains unchanged, while competition among producers continues. SunSirs expects the PAC market to remain largely stable throughout June.