Aluminum fluoride prices continued to weaken in June as trapped in a pattern of weak supply and demand, situation unlikely to change in the short term

During the May 9 to June 6 period, aluminium fluoride prices continued to weaken. As of now, SMM aluminium fluoride prices closed at RMB 9,630-9,900 per tonne, and SMM cryolite prices were quoted at RMB 7,500-9,500 per tonne.

On the raw material side, for fluorspar, the current delivery-to-factory price for 97 per cent fluorspar powder concentrated in the RMB 3,200-3,550 per tonne range. Throughout the period, the fluorspar market remained sluggish, with intense supply and demand bargaining, and the price center continuously declined. In terms of supply, northern enterprises gradually resumed production as temperatures rose, coupled with a large influx of low-priced foreign trade goods into the market, leading to a significant YoY increase in overall supply, and continuous pressure on the supply side. However, restricted mining and low inventory levels provided some support to the supply side, creating a mixed situation. Demand remained weak, with sluggish end-use consumption, and downstream enterprises generally adopting a wait-and-see attitude, resulting in strong pressure to drive down prices, making market transactions noticeably sluggish. As a result, fluorspar prices accelerated their downward trend. Despite some factors resisting the decline on the supply side, the weak market situation is unlikely to change in the short term, and prices are expected to continue weakening. SMM data shows that the current average delivery-to-factory price for 97 per cent fluorspar powder is RMB 3,367 per tonne, a 6.03 per cent decrease from May 9. Meanwhile, the price of another key raw material, aluminium hydroxide, saw a significant increase due to mine-related factors, causing alumina prices to rise rapidly, and the current ex-factory average price for aluminium hydroxide, as tracked by SMM, is RMB 2,131 per tonne, a 13.68 per cent increase from May 9. Additionally, high sulphuric acid prices have increased cost support for aluminium fluoride.

The aluminium fluoride market currently exhibits weakness in both supply and demand. On the supply side, since the aluminium fluoride tender pricing was determined in May, product prices have been continuously declining, almost reaching the cost line, significantly compressing profit margins. This has led to decreased production enthusiasm and long-term low capacity utilisation rates. The market has adopted a "produce based on sales, cautious production scheduling" strategy, lacking motivation for expansion in the short term, and it is expected that the supply scale will remain low and stable. On the demand side, although there are regional adjustments in the aluminium industry, such as the relocation of Shandong's capacity to the south, the national total capacity remains largely stable, with no significant increase in demand for aluminium fluoride. Downstream enterprises, driven by cost control and market sentiment, generally adopt a procurement strategy that only meets basic needs, making it difficult for demand to achieve breakthrough growth.

Brief Comment: During this period, the June tender pricing for benchmark downstream aluminium enterprises was finalised, and aluminium fluoride market prices maintained a weakening trend. The June benchmark enterprise tender price dropped RMB 150-200 per tonne to RMB 9,630-9,700 per tonne. The current aluminium fluoride market continues to experience weak supply and demand. After entering June, prices of both raw materials and finished products have declined, and corporate profitability has not improved. Most enterprises are experiencing losses, and it is difficult to increase the low operating rates of enterprises in the short term. Coupled with the absence of positive factors on the demand side, aluminium fluoride prices are expected to remain stable in the short term. Moreover, there is an expectation of a decline in raw material prices in June, and prices are expected to remain relatively weak next month.

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.