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Domestic Market Price of AHF Continually Drops in July 2013 (20130823)

Domestic Market Price of AHF Continually Drops in July 2013 (20130823)

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Published by: CCM International Limited on Aug 23, 2013
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03/17/2014

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Domestic market price of AHF continually drops in July 2013
Summary:
Domestic market price of AHF has been decreasing for four months since March2013.
Tags:
hydrogen fluoride, AHF, domestic market price, cost, market demand, downstreamindustriesThe domestic market price of anhydrous hydrogen fluoride (AHF) in China in July 2013 wasabout USD1,120/t, down by 3.03% compared with that in June 2013, when it stood at aboutUSD1,155/t. Actually, its market price has been decreasing continuously for four months sinceMarch 2013 when it reached USD1,257/t, the highest level in the first seven months of 2013,according to China Fluoride Materials Monthly Reportissued by CCM in August. The continuous fall of AHF's market price in China in July 2013 was mainly caused by thefollowing two reasons.First, the cost of fluorite kept decreasing during the period. In July 2013, the average marketprice of fluorite (CaF2>97%), the major raw material of AHF, dropped by 5.45% month onmonth. Domestic fluorite producers kept their operating rate of the product at a high levelbecause of the suitable weather for production, which led to a high inventory. However, themarket demand for fluorite did not increase because of the flagging domestic economy.Therefore, the oversupply of fluorite led to a continuous fall of its market price.Second, the market demand for AHF from downstream industries in July 2013 was quite weak.In H1 2013, the overcapacity of the aluminum fluoride (AlF3) industry was still serious, whichled to a low operating rate. Under the circumstance, the demand for AHF from the AlF3industry largely declined. Moreover, the operating rate of the refrigerant industry in China inJuly 2013 was also low. Some refrigerants enterprises even shut down their production linesbecause of the shrinking profits. For instance, Shandong Dongyue Group Co., Ltd. shut downits 1,1,1,2-tetrafluoroethane (R134a) production lines on July 19, 2013 and may resumeproduction in the middle of Aug. 2013. Along with the continually decreasing market price and weak demand, AHF producers havereduced their operating rate. In July 2013, the average operating rate of domestic AHFenterprises was 46.80%, decreasing by 2.92% month on month. Some of the enterprises inNorth China, especially in Inner Mongolia, have shut down their production lines to alleviatetheir inventory pressure.The market situation of AHF in South China is better than that in North China. As a matter of fact, most of the refrigerant producers are located in South China, where AHF producers havean obvious price superiority compared with that in North China, thanks to lower transportationcosts. It's estimated that the market price of AHF in South China in July 2013 was USD80/tlower than that in North China.

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