Fluorite prices will hit a 4-year high

"In the past one month, the price of fluorite has been rolling upward, and after breaking through the 3,000 yuan (ton price, the same below) mark, it has conquered the 3,100 yuan point, and now reaches 3,200 yuan
.
" Mr.
Yao, a fluorite dealer in Liaoning, said, "The situation of short supply in the fluorite market has not been seen for many years
.
If nothing else, fluorite quotes will continue to rise next, just one step away
from the 2018 high.
”

The low operating rate became the fuse

For the reason for the price increase of fluorite, Jinshi Resources pointed out in the research report that it was mainly caused by
the low operating rate of the supply side recently.
Mining enterprises face increasingly stringent safety and environmental protection requirements, resulting in insufficient
start-up.
In addition, fluorite enterprises in the northern region entered the stage of winter shutdown, and the supply decreased
accordingly.

Since the end of October, fluorite manufacturers have continuously joined the ranks of parking maintenance and stopping external quotations
.
Longzhong information shows that the proportion of fluorite manufacturers that have stopped external quotations on its platform has reached about
60%.
At the end of October, a number of enterprises such as Henan Tongbai, Xinyang Tenghui, Erlian Baiyin, Guangde Changying and so on either suspended quotations due to parking maintenance, or suspended quotations because they mainly did winter storage.
.
.

In addition to the low operating rate, Chen Ling, an analyst at the business agency, believes that the repeated poor transportation of the epidemic in some areas has also led to tight supply of fluorite and high prices
.

According to data from business agencies, on November 15, 97% of the mainstream fluorite powder wet powder factory quotations in various regions in China were 3200~3300 yuan including tax, an increase of more than 8% over the same period last month; Shenlong Flotation, China Steel Mining, De'an Industry and other manufacturers quoted 3,300 yuan, an increase of 10%
over the same period last month.

In the short term, considering the traditional demand season and the seasonal suspension of some manufacturers in the north, the industry generally has sufficient confidence in the fluorite market
.
Yang Lin, a chemical analyst at Guosen Securities, believes that the fourth quarter is the traditional production off-season and demand season of fluorite, and it is difficult to increase the operating rate in the northern region, and the supply is still tight, while the downstream hydrofluoric acid and refrigerant industry is carrying out winter storage, which is in the peak season of stocking, which will drive the price of fluorite to run
strongly.

The increase in exports adds another handful of firewood

"Overseas mines in Canada and Mexico have stopped production, domestic fluorite manufacturers have received more and more inquiries and orders from international buyers, and fluorite exports have increased
significantly.
" Chen Ling believes that the sharp increase in exports has also aggravated the tight supply of the domestic fluorite market
.

According to public information, Koura Mexico is the world's largest producer of fluorite, accounting for more than
20% of the total global supply.
For safety reasons, it implemented production cuts in March
.
Canada's 130,000-tonne-per-year fluorite mine has ceased production due to cost price inversion and entered bankruptcy proceedings
.
In addition, Vietnam has an annual output of about 200,000 tons of fluorite powder, but this year due to resource problems, production is also declining
.

"The suspension of overseas fluorite mines has made foreign fluorine chemical giants generally lack raw materials, which in turn has led to a significant increase
in China's fluorite exports.
" Yang Lin analyzed
.

Customs statistics show that in January ~ September this year, China's 97% fluorite exports totaled about 172,100 tons, an increase of 397.
32%
over the same period last year.
Among them, China's fluorite exports in September were about 60,000 tons, an increase of 55% from the previous month and 110%
year-on-year.

"International supply is tight, foreign customers have turned to China for procurement, and the increase in exports has driven the price of fluorite up
.
" Yang Lin analyzed that in the future market, Mexico's Koura has not fully resumed supply, and the supply reduction in major producing areas such as Canada and South Africa will continue
this year.
In addition, since the beginning of this year, China's export container freight index has fallen, and the decline in export transportation costs will continue to promote exports, which will benefit the domestic fluorite market
.

Resource scarcity is the fundamental logic

"In fact, since the end of 2018, the fluorite market has been in a downturn, except for a few time points, the average price is mostly below
3,000 yuan.
" Mr.
Yao, a dealer, believes that the fundamental factor driving the market out of the 4-year deadlock is the gradual emergence of the scarcity of fluorite resources
.

Jinshi Resources' 2021 annual report shows that China's fluorite reserves account for only 13.
13% of the world, while the output is close to 60%.

The reserve-to-production ratio of a single fluorite mine is only more than 10 years, and the resource exploitation is excessive, the resource guarantee capacity is seriously insufficient, and the resource security is worrying
.

Relevant departments are also aware of the problem of excessive mining of fluorite, and have listed fluorite in China's strategic mineral catalog, becoming a world-class scarce resource
similar to rare earths.
At the same time, in order to standardize the industry and protect fluorite resources, the relevant departments have also issued a series of policies on the "Fluorite Industry Specification Conditions (Draft for Comments)" to optimize the stock, adjust the structure, promote mergers and acquisitions, and increase industrial concentration
.

It is precisely because of the policy guidance of protective mining of fluorite resources and increasingly strict environmental protection policies that the threshold of fluorite mining has gradually increased, and production capacity has hardly expanded in recent years, and output has also shown a downward trend
.
According to Baichuan Yingfu data, in January ~ September this year, China's acid grade fluorite powder output was 1.
8788 million tons, down 32.
31%
year-on-year.
Among them, the output of acid grade fluorite powder in China in September was 236,000 tons, down 26.
3%
year-on-year.

In the context of declining production, driven by the stable traditional demand downstream and the good demand for new energy, the fluorite market has completely walked out of the decline since the end of 2018 and entered the upward channel
.
Up to now, the largest increase in fluorite prices during the year has reached 24.
03%.

Li Zizhuo, a researcher at East Asia Qianhai Securities, believes that in the long run, with the further increase of the entry threshold of the fluorite industry, the new production capacity will be limited in the future, and the new fluorite production capacity planned in 2022~2027 will only be 80,000 tons
.
In terms of demand, in addition to the steady growth of demand in the traditional downstream refrigerant industry, driven by new energy and semiconductor industries, the increase in demand in emerging fields will be more obvious in the next two or three years, so it will form a long-term support
for the fluorite market.