Demand release and low supply persist, aluminium fluoride prices continue to rise in November

Supported by tight supply and recovering demand, aluminium fluoride prices were raised significantly in October. As of end-October, SMM's aluminium fluoride quotation was RMB 12,600-13,000 per tonne; cryolite consolidated on a strong note amid improving domestic and overseas demand, quoted at RMB 8,300-9,000 per tonne.

Cost side: Raw materials were mixed and diverged, aluminium fluoride costs loosened from highs in October

In October, fluorite prices consolidated at highs with a slowing upward pace. On the supply side, mine safety supervision remained stringent: Inner Mongolia's "Ten Measures" continued to be implemented, limiting the flexibility of regional mine operations; Zhejiang's policy of shutting down small mines kept advancing, with the pace of mechanisation renovation acceptance diverging. Some mines saw minor production resumptions but with limited growth; compliance inspections in Jiangxi and Fujian continued, overall finished product inventories remained low, and the pattern of prioritizing long-term contract orders stayed unchanged.

Mongolian imported supply continued to grow, with port clearance and transport capacity constraints easing marginally. More cargo arrived in the north, supplementing domestic supply and intensifying regional divergence in availability. On the demand side, hydrofluoric acid showed a north-south divergence due to sulphuric acid production cuts.

Tight supply in the south drove up November long-term contract prices, while northern producers had the willingness to hold prices firm but lacked upward momentum; refrigerants entered the traditional off-season, and combined with quota constraints, operating rates continued to pull back, with strong expectations for production cuts in November and weak purchase willingness; demand in the lithium battery industry chain had yet to recover, and downstream buyers had limited acceptance of high-priced fluorite, mostly maintaining hand-to-mouth purchasing and low inventory operations. The fluorite market shifted from earlier price rallies to high-level gaming and consolidation.

As of October 30, SMM's average delivery-to-factory price of 97 per cent fluorite powder was approximately RMB 3,583 per tonne, up 0.70 per cent from end-September. Aluminium hydroxide came under pressure as alumina prices declined, with the SMM alumina index falling below RMB 2,650 per tonne by month-end, dragging aluminium hydroxide lower in a choppy pattern. By end-October, the average ex-factory price was RMB 1,632 per tonne, down 0.91 per cent from end-September.

For sulphuric acid, falling sulphur prices and production resumptions at some previously idled maintenance units drove supply recovery, but downstream demand from phosphate compound fertilizers and other sectors lacked follow-through. Prices retreated from highs, and in late October the market gradually became stagnant with intensifying regional divergence; maintenance at units in the south created localised tightness, but overall demand was hard to improve, and further downside for sulphuric acid is expected to be limited. Overall, raw material trends for aluminium fluoride diverged in October, and the industry's comprehensive production costs declined somewhat but remained at high levels.

Supply and demand: Profit recovery and tight supply boost aluminium fluoride procurement sentiment

Supply side: The aluminium fluoride market went through a round of price negotiations in October. As offers rose, enterprise profitability gradually recovered. Earlier, persistent industry losses suppressed production loads, and enterprises mostly adopted flexible production schedules, prioritizing long-term contract deliveries.

Spot circulating supply was already tight. After profitability recovered, some producers showed marginal improvement in operating willingness, but new output release remained limited. Upstream fluorite was supported by safety and environmental protection-related controls combined with expectations for winter mine production cuts, keeping ore sources scarce and prices fluctuating at highs. Hydrofluoric acid costs remained rigid, continuing to constrain aluminium fluoride output expansion. Meanwhile, wet-process supply replenishment was insufficient, making the tight supply pattern difficult to ease in the short term.

Demand side: Downstream operating aluminium capacity stayed high, providing rigid demand support for aluminium fluoride. Earlier, aluminium producers actively controlled inventory and purchased as needed. As existing raw material inventories were gradually consumed, restocking demand continued to release.

Combined with strong market expectations for future price hikes, aluminium producers' stockpiling and procurement sentiment improved notably. Procurement remained dominated by long-term contracts for locked supply, with spot purchases mostly sporadic. Month-end gradually entered the winter stockpiling cycle, and with a slight boost from the export market, overall demand-side performance was solid.

Brief commentary: Overall, aluminium fluoride raw material trends diverged in October. Fluorite consolidated at highs, while aluminium hydroxide and sulphuric acid weakened. Comprehensive costs pulled back slightly but remained elevated. Tight supply combined with released restocking demand from aluminium producers lifted procurement sentiment, and prices saw a broad upward adjustment.

Supported by rigid raw material constraints from mine safety supervision and winter production cut expectations, coupled with the industry's overall low inventory and low operating rates creating a tight spot supply pattern, as well as ongoing winter stockpiling by aluminium producers, aluminium fluoride prices are expected to hold up well in November. However, downstream procurement pace and raw material price fluctuations will still constrain the upside. 

Note: This article has been issued by SMM and has been published by AL Circle with its original information without any modifications or edits to the core subject/data.