In April 2016, China’s anhydrous hydrogen fluoride (AHF) market went up
continuously: average ex-works price of AHF (99.95%) up by 3.61% MoM to
USD1,034/t (RMB6,678/t).
In May, the rise continued, price up to over USD1,053/t (RMB6,800/t) already.
Since early 2016, the domestic AHF price has maintained an upturn. This is
mainly impacted by the reduced supply in main producing areas, the increasing
demand and the price recovery of raw material, according to analyst CCM.
Ex-works price of AHF (99.95%) in China, Sept. 2015–April 2016
Note: AHF stands for anhydrous hydrogen fluoride
Source: CCM
Reduced supply
According to CCM’s research, in Fujian Province (one of the domestic main AHF
producing areas), some manufacturers suspended production in late Dec. 2015,
cutting down the supply in the province and even in southern China. In this
context, the Fujian manufacturers under production took the lead to up-regulate
the prices, which were then followed by the manufacturers in Jiangsu and
Zhejiang provinces.
In 2016, during the Spring Festival (Feb.), the production
suspension increased, resulting in deficient market supply. In addition, the
downstream refrigerant industry began to stock up AHF rigidly. As the peak
production and sales period for refrigerant (Q2) came, the supply and demand
relation was balanced to certain extent.
Recovered raw material price
Since Feb. 2016, the domestic fluorite industry maintained a low operating
rate, impacted by the fairly low temperature, the narrowed profit margin and the
enhanced government supervision. Many manufacturers put off their production
restoration. By March, the average operating rate was only about 20%. As the
demand rose constantly, the shipment rebounded, supporting the price recovery.
Strong willingness to keep high prices
Through years of downturns, the domestic AHF price for a long period fluctuated
around the cost line, which made it normal for manufacturers to run business at
low profits and even at losses. Some enterprises, restricted by their simple
supply chains and pressured by the fund turnover and shipment, suspended
production over a long period of time.
However, this helped improve the industry concentration. “The price is
increasing this year. Producers are transferring their strategies, from price
competition for shipment to joint efforts in keeping high prices,” commented
trade sources to CCM, “They are strongly determined to get rid of low profit
operation.”
CCM expects the AHF price upturn to continue till June 2016. This is mainly
because:
- Downstream refrigerant industry is still at the peak production and sales
period, with price increasing constantly. Though it is hard to further raise
the already high level operating rate, the demand now is considerable.
- Upstream fluorite market will continue price rises probably, since the supply
in the short run will be relatively tight and the demand will increase.
Notably, the downstream refrigerant industry has gradually accepted the
up-regulated AHF prices. This means that the producers in northern China who
previously stabilised the prices, may also increase the prices later.
This article comes from China Fluoride Materials Monthly Report 1605, CCM
About CCM:
CCM is the
leading market intelligence provider for China’s agriculture, chemicals, food
& ingredients and life science markets. Founded in 2001, CCM offers a
range of data and content solutions, from price and trade data to industry
newsletters and customized market research reports. Our clients include Monsanto,
DuPont, Shell, Bayer, and Syngenta. CCM is a brand of Kcomber Inc.
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Tag: fluoride