Weak Demand Pictures Bearish Outlook on Fluorspar Prices for February 2024

Mexico: Throughout 2023, weak demand from the downstream construction sector has challenged the market fundamentals of various chemicals, including Fluorspar. Since the year's start, destocking sentiments have prevailed in the European region, with downstream manufacturers less willing to build up inventories. Manufacturers have been reducing their offers to stimulate new market shipments. Moreover, the winter season has also put substantial pressure on demand for the downstream refrigeration industry. Simultaneous tightening of policies by global central banks has negatively impacted fluorspar demand, leading to a decline in prices on a global scale.This has resulted in weakened consumption rates of Flourspar andimpact can be seen on he prices.

In Mexico, the price of Fluorspar demonstrated a decline of USD 20 per ton last month. This decrease is primarily due to reduced demand from the construction sector, leading to oversupply and downward pressure on prices. Moreover, demand from downstream Hydrofluoric Acid industries has remained sluggish, contributing to the downward trend in Fluorspar prices. Additionally, demand of Fluorspar from Western markets amid persistent inflationary pressures has further contributed to the downshift observed in Fluorspar prices. The chemical industry is also facing destocking pressures, further reducing demand. Additionally, the typical winter slowdown in construction activity has worsened the market's sluggishness. As a result, manufacturers have adjusted production levels to align with demand and stabilize prices.

On the other hand, in China, the market was predominantly influenced by holiday sentiments, with no notable procurement activities occurring during the period. Market participants have reported that the inflow of inquiries from the downstream construction sector has plummeted amidst low seasonal demand. Market transactions from the Hydrofluoric Acid industries were also based on immediate requirements. Demand from Western markets, including Europe and the US, has remained sluggish, with the construction sectors in these regions continuing to exhibit weakness. Frequent safety inspections and China's emphasis on a green economy have made it harder to obtain mining rights, with stricter environmental regulations for Fluorspar production sites. According to market sources, the Chinese government is consolidating small fluorspar mines into larger ones to increase production efficiency and reduce environmental impact. This involves shutting down smaller operations and combining them into fewer, larger mines with expanded output volumes.

According to the pricing intelligence of ChemAnalyst, Fluorspar prices might face downward pressure due to reduced demand from downstream industries. In addition, refrigerant industries are also expected to remain sluggish, further leading to price reductions in the forthcoming weeks.