Chinese fluorspar producers bullish on rising demand from hydrofluoric acid sector

Market participants in China’s fluorspar market are expecting low inventory in the downstream hydrofluoric acid (HF) sector to push up fluorspar demand in the near term, sources told Fastmarkets

After fluorspar prices hit record highs in the third quarter of last year due to a supply shortage, demand has remained tepid from the hydrofluoric acid industry with little restocking taking place before the Lunar New Year and leading to little movement in fluorspar prices in recent months.

Fastmarkets’ weekly price assessment for fluorspar, acidspar, 97% CaF2, wet filtercake, fob China was $540-570 per tonne on Thursday February 29, unchanged for five consecutive pricing sessions since January 11.

“Most fluorspar factories have gradually resumed work this week [after the Lunar New Year holiday], and some producers have raised their offer prices,” a trader told Fastmarkets. “Despite that, deals were still made at previous prices.”

Though the HF industry has been facing an issue of oversupply in recent years, as temperatures rise, the refrigerant sector (with HF being the raw material) will enter its peak season and this will likely ease the current supply and demand difficulties, according to an industry analyst.

A second trader said that a fluorspar supply shortage has persisted if not worsened entering new year. The extreme cold weather and snowstorms in Mongolia has led to lowered imports of fluorspar from the country, while China’s domestic inventory of metspar (fluorspar raw ore) is nearly all consumed, sources said.

Mongolia has the world’s fourth-biggest reserves of fluorspar and has been the largest exporter of fluorspar to China. Based on official Chinese customs data, China’s exports of fluorspar have been decreasing over the years while its imports have surged.

In 2023, China imported a total of 912,732 tonnes of metspar from Mongolia, a year-on-year increase of 348% from 203,527 tonnes in 2022, latest customs data shows.

China’s Ministry of Finance has published plans to cut import taxes on fluorspar starting this January, with the aim of encouraging imports of fluorspar-related products to increase the country’s stockpile.

Sources told Fastmarkets that they expect imports of fluorspar to continue rising through 2024 as China’s fluorspar supply tightness persists due to industry consolidation and frequent safety inspections.

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