Gao Linda: Aluminum fluoride industry needs market regulation

Asian Metal: Thank you for accepting our interview. The Aluminum Fluoride Trade Association hold conference recently, and most producers agreed that they will offer a price of RMB7,500/t (USD1,235/t). How does this price level come up with?

Gao: According to the current market situation, it is reasonable for aluminum fluoride producers to conclude deals at the price of RMB7,400-7,500/t (USD1,219-1,235/t). We mainly considered that the fluorspar price will certainly increase in December and January, and we were not taking other raw materials such as sulfuric acid into consideration. This price came up based on the current raw material price and market situation. We studied the production cost of all the plants, and we choose the intermediate value. Aluminum fluoride producers can avoid losses under the price of RMB7,500/t (USD1,235/t) while they cannot gain much profit.

Asian Metal: Aluminum fluoride price has kept increasing for three months since late August, and how can you explain the increasing price?

Gao: It is mainly because of the raw material price that pushes up the price of aluminum fluoride. In August, aluminum fluoride producers purchased fluorspar with the price of RMB1,700/t (USD280/t) delivered, while the current price goes up to RMB1,950/t (USD321/t). The fluorspar consumption will be 1.5 ton when producing one ton of aluminum fluoride, so the production cost increases largely.

Asian Metal: Currently, the market price is around RMB7,100/t (USD1,169/t) ex works, and how about the production cost?

Gao: The cost is different in different plants, and it depends on the financial cost and the transportation distance of the raw material purchasing. Producers cannot obtain profit based on the current price, and the total production cost is around RMB7,000/t (USD1,153/t). The fluorspar producers offered RMB2,200/t (USD362/t) for dry powder.

Asian Metal: How do you think of the new capacities in Shanxi, Inner Mongolia and Jiangxi?

Gao: Usually, it will take at least 3 months for new aluminum fluoride plants to run normally, so new capacities may not influence the market in the first quarter of next year. Besides, some new plants have no advantage in raw materials and the purchasing price may be higher, so they may lose money based on the current price level. If the production cost is much lower than concluded price, the new plant may cut off production after one or two months. Therefore, the industry needs market regulation. On one hand, aluminum fluoride price increases if the raw material price climbs up; on the other hand, if the market price decreases to a certain degree, the plants will halt production naturally. For instance, if the total production cost is RMB7,000/t (USD1,153/t) and the market price is RMB6,800/t (USD1,120/t), some producers may endure this situation for a while, but if the price goes down to RMB6,600/t (USD1,087/t), we may halt production. At present, if one plant is well managed, it may have a little profit, but if not, the plant will still suffer losses under the current situation.

Asian Metal: How about the current fluorspar market?

Gao: Though it is warm winter this year, fluorspar plants in North China will still halt production gradually. And fluorspar plants hold stocks now which will be consumed in December and January. The price will keep increasing since only the plants in South China can produce fluorspar powder. The fluorspar supply now is not so tight, but some suppliers require that they need to be paid by cash instead of acceptance. It is predicted that the price may hit RMB2,300/t (USD378/t).

Asian Metal: How do you think of the future aluminum fluoride price?

Gao：Most producers can avoid losses now. I think the price may keep increasing until next February or March, after which it may stop climbing up. The highest point will not be higher than RMB7,800/t (USD1,285/t) even if the fluorspar price will go up by RMB150/t (USD24.7/t), unless the fluorspar price increases to RMB2,500-2,600/t (USD412-428/t). Besides, the more we produce, the sooner the price will show decline. Also, we should consider the slack downstream aluminum market. We hold conference, sharing information and technology, and let producers themselves decide how their plants operate, but what we also need is that our country can carry out some regulations and control the oversupply and environmental problem to make the market run healthily.

Asian Metal: Thanks again for your cooperation.

Gao: Thank you!