An analysis of the reasons for the increase in the price of aluminum fluoride

According to recent reports, the price of aluminum fluoride skyrocketed by 11% in November 2012. This sharp increase over such a short period has sparked widespread curiosity about what factors could have caused this dramatic rise. On one hand, there was a significant 12% increase in the price of fluorspar powder over the past three months. As fluorspar is a key raw material in the production of aluminum fluoride, the rising cost of these inputs directly impacted the overall production expenses. Additionally, the National Materials Reserve Bureau's decision to purchase and store 160,000 tons of primary aluminum further fueled demand, creating an upward pressure on aluminum fluoride prices. Prior to this price surge, aluminum fluoride producers had been struggling with declining profits, with prices falling from 11,000 yuan per ton to as low as 6,000 yuan per ton. In response to these market conditions, manufacturers seized the opportunity to implement substantial price adjustments, leading to a noticeable increase in their operational efficiency. Although this short-term price hike seems promising, analysts predict that the magnitude and intensity of the increase will gradually diminish moving forward. Guodu Securities suggests that the chemical sector has recently faced temporary supply shortages due to maintenance work and seasonal weather impacts. Low inventories across different stages of the supply chain have made product prices highly responsive to fluctuations in supply. However, without strong demand support, the price hikes are largely driven by rising costs rather than actual market needs. Consequently, it is unlikely for the entire industrial chain to experience synchronized price recoveries in the near future, making it challenging for companies to significantly boost profitability. For investors, Guodu Securities recommends focusing on firms with relatively stable demand, such as Yangon Chemical and Lianhua Science and Technology. Additionally, companies like China Chemicals and Donghua Science and Technology, which benefit from investments in coal chemical projects, are worth keeping an eye on. In conclusion, while the current spike in aluminum fluoride prices offers some optimism, it remains crucial for stakeholders to carefully assess both internal and external factors influencing the market. Only through a balanced approach can businesses hope to navigate these turbulent times effectively.