Fluorspar Market: Easy to Rise, Hard to Fall

Amid global heat alerts stimulating demand for cooling products like air conditioners, the Fluorspar market has garnered industry consensus as a "rising tide." While the entire supply chain witnesses upward momentum, varying degrees of prosperity are observed across different sectors.

According to production monitoring data from AVC (Aowei Cloud), domestic production of household air conditioners surged notably from March to April. This upsurge propelled the Fluorspar-Hydrofluoric Acid-Refrigerant supply chain, particularly highlighting refrigerants, which saw prices hitting nearly three-year highs. Fluorspar prices also soared, while hydrofluoric acid prices remained somewhat subdued but showed signs of recovery.

Fresh reports from the recent China Refrigeration Exhibition reveal an unprecedented influx of foreign customers, hinting at a surge in overseas demand. Some refrigerant manufacturers are reportedly withholding stocks, anticipating higher demand.

The industry has witnessed a booming phase since the allocation of third-generation refrigerant quotas in November last year. Refrigerant prices have continuously soared, with some models surpassing the 30,000 yuan/ton mark. Moreover, refrigerant manufacturers' profits have substantially increased with the primary raw materials like hydrofluoric acid remaining relatively low.

In contrast, the outlook for Fluorspar, a key raw material, appears somewhat uncertain, with industry opinions divided. While some industry insiders suggest ongoing supply shortages and anticipate further price hikes, others argue that despite dwindling Fluorspar inventories, poor downstream hydrofluoric acid market conditions may hinder significant price increases.

Notably, with robust support from the supply side, the notion of Fluorspar being "easy to rise, hard to fall" has become an industry consensus. Prices have steadily climbed since the beginning of the year, with the average price reaching 3,500 yuan/ton, marking a 13% year-on-year increase and positioning at historical highs. Regardless of future price movements, major players like Jinshi Resources are poised for substantial growth in the first half of the year.

In contrast, hydrofluoric acid finds itself in a less favorable position sandwiched between refrigerants and Fluorspar. The recent price stabilization and upturn in hydrofluoric acid are primarily attributed to voluntary production cuts by manufacturers following price inversion. However, the industry's overall prosperity remains notably lower compared to upstream and downstream sectors. Industry insiders suggest that while hydrofluoric acid prices are currently supported by cost increases such as Fluorspar, upcoming production resumptions may lead to supply increases and price pressures.

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