Fluorochemical Feedstock Market: Divergent Forces at Play

Recent market information on fluorochemical feedstocks has been mixed, with various players pursuing different strategies. For fluorspar producers, the focus is on maintaining prices by leveraging weak supply and broad-based downstream price increases. For anhydrous hydrofluoric acid (AHF), persistently high sulfuric acid costs continue to squeeze profit margins, leading some producers to cancel orders to protect their own interests.

Fluorspar: Leveraging Momentum Proves Challenging

Overall trading activity in the fluorspar market remains subdued. Supply-side recovery is ongoing, primarily driven by the resumption of operations at large mining and processing enterprises. However, small and medium-sized mines and plants continue to face restart restrictions due to policy, safety, and equipment factors. Downstream consumption has weakened, particularly in Jiangxi and Fujian provinces, where downstream plant capacity utilization rates have dropped significantly under pressure from sulfuric acid costs, reducing fluorspar digestion capacity. With a bearish long-term outlook, some holders have already begun to sell at slightly lower prices. As Mongolian supply gradually enters the market and downstream enterprises maintain safe inventory levels, the existing tight supply-demand balance is poised to break. It is anticipated that the domestic fluorspar market will experience a gradual decline in the short term. The main factors are low purchasing enthusiasm from downstream plants, their overall stable sentiment, and the fact that any future AHF price increases are largely seen as catch-up adjustments for previous costs and profit margin recovery, offering little room for fluorspar price gains. While fluorspar still has some superficial support, the momentum is insufficient.

AHF Operating Rates Near Inflection Point, Unable to Alter Oversupply Fundamentals

Previously, the AHF market saw a significant drop in operating rates due to scarce sulfuric acid feedstock and repeated high-price pressures. However, as the sulfuric acid market's upward push weakened and price increases became limited, downstream acceptance of high prices was constrained. Furthermore, the ban on sulfuric acid exports in May is expected to alleviate the sulfuric acid market to some extent. With the fluorspar market showing weakness, a shift in trading focus, and pressure from other bulk commodities, there is already an inclination for slight price declines in the AHF market. After several fluctuations, spot AHF prices have frequently reached highs, which, although mostly from small-volume transactions, have bolstered market confidence. The previously strong cost pressure supported producers' calls for price hikes. As these proposed increases materialized, a reluctance to sell has emerged in the market, forcing spot market transactions at historically high prices, albeit in small lots. While market information is complex, the underlying logic of oversupply remains unchanged. Contraction in terminal production schedules also negatively impacts the upstream market.

Sulfuric Acid Market Sees Mixed Movements, Cost Pressure Persists

This week, the domestic sulfuric acid market exhibited a divided sentiment with localized increases and decreases. On the cost side, sulfur prices remained high and volatile, and pyrite prices stayed firm, providing solid cost support. On the supply side, some acid plants that were previously shut down for maintenance have gradually resumed production, but overall industry inventory levels remain within a reasonable range. On the demand side, phosphate fertilizer production for spring ploughing is winding down, leading to weaker demand. The chemical industry maintained rigid procurement, with transactions mostly driven by immediate needs. Regional market differentiation was evident this week: prices in Yunnan, Gansu, and Guangdong continued to rise, driven by costs and regional supply-demand dynamics. The Henan market softened slightly; a medium-sized acid plant in Sanmenxia that was under maintenance has resumed operations, and due to cost pressure on fertilizer enterprises, the market's trading focus shifted downward. In the short term, the domestic sulfuric acid market is expected to maintain a firm, high-level stance with strong wait-and-see sentiment. As of now, delivered prices for 98% smelter acid in Hubei are around 1,650-1,800 RMB/ton, down 8.33%/5.26% week-on-week. In the Yunnan market, delivered prices for 98% smelter acid are 1,710-1,790 RMB/ton, up 3.64%/3.47% week-on-week.