Is the price of fluorite hitting its highest point in nearly five years?

Driven by continuous tightening of supply, fluorite is attempting to break free from the drag of the demand side and emerge from an independent market trend.
According to multiple sources from Caixin News Agency, since May, there have been frequent reports of fluorite mine shutdown and rectification, stimulating further price increases and approaching a five-year high. Some mining companies have already filled their orders in May, and industry inventories have also declined compared to Q1, indicating an unprecedented overall prosperity.
Market data shows that since May, the price of fluorite powder has not fallen as expected, but has risen by about 4.7% against the trend. 97% wet fluorite powder once approached the 3800 yuan/ton mark, which is not far from the high point in the past five years.

                                 97% price trend of fluorite wet powder from 2019 to present, data source: ACMI
This performance clearly contradicts previous market expectations. "Previously, we expected that after the previous few months' increase, the price of fluorite in May may remain stable and decrease, and the tight supply side may be alleviated. However, due to various unexpected factors, the actual mining operation did not meet expectations, and prices rose instead of falling," said an industry analyst in an interview.
The main reason for the lower than expected mining operations is strong supervision. "Various safety regulatory notices have been released one after another, first the nationwide safety rectification action of fluorite mines in March, followed by off-site inspections of non coal mines. As the inspections deepened, news of production stoppages and rectification began to spread in some areas, causing even more supply shortages. From the data we have, fluorite inventory in the second quarter decreased compared to the first quarter, and the overall market prosperity is very high." said Tang Xu, an analyst at Longzhong Information.

Since the beginning of this year, fluorite has sparked an unprecedented wave of regulation. In March, the Comprehensive Department of the State Administration of Mining Safety issued a notice to carry out a special rectification action on the safety production of fluorite mines nationwide, opening the prelude to this round of regulatory storm. At that time, a senior mining enterprise insider introduced that this action was unprecedented in the industry and was expected to lead to further contraction of the supply side, but the impact intensity lacked historical data for reference.
As the rectification action progresses, the impact on the supply side of fluorite is beginning to emerge. In May, the national special rectification action reached its peak, and there were frequent reports of mine shutdowns and rectification within the industry, stimulating further increases in fluorite prices.
On the evening of May 6th, the industry leader Jinshi Resources announced that its mines were ordered to suspend production and operation due to safety hazards. Subsequently, the Caixin News Agency reporter learned from the company that the processing and sales of the extracted fluorite inventory were not affected. In other words, considering the unknown duration of production shutdown, it is uncertain whether this incident will cause significant economic losses to the company.

For the future market, the main controversy lies in whether the supply side tension can be alleviated in the short term. At present, the national fluorite mine safety rectification action has started for more than two months, and the risk investigation work has reached the middle stage. Based on this, the industry expects that the supply shortage may have reached its peak, and as the problem is resolved and the mine resumes work, prices may continue to rise significantly, and there may be insufficient action. In addition, the predicament of downstream hydrofluoric acid has not improved, which will also constrain the continued rise of fluorite prices.