CCM: China’s AHF market bound to recover throughout H1 2016 08-26-2016

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.

 

For more information about CCM, please visit www.cnchemicals.com or get in touch with us directly by emailing econtact@cnchemicals.com or calling +86-20-37616606.

 

Tag: fluoride

 

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