Alufluoride benefits from growing demand and improved pricing of primary aluminium

Alufluoride, one of the few manufacturers of specialty chemical aluminium fluoride in India,  a raw material for aluminium is leveraging on the uptrend in its end market – aluminium, as the raw material  industry is experiencing  supply tightness and improved pricing.

After struggling due to low aluminium and raw material prices weak pricing environment for the last few years, Alufluoride has witnessed a good traction in its earnings supported by a healthy balance sheet, along with a niche production.

Aluminum fluoride is used in electrolytic processing of aluminium from alumina as it lowers the consumption of electricity required in the smelting process and thereby helps in the reduction of production costs of aluminium.

A few players like – Tanfac Industries, Alufluoride, SPIC (Southern Petrochemical Industries Corp) comprises of the Indian aluminium fluoride industry in India with a limited domestic capacity.

Tanfac Industries and Alufluoride, together cater to about 14% of Indian demand. Hence, there is a huge scope for import substitution and new domestic capacity building with respect to improved pricing and demand from the end markets.

Alufluoride had also been impacted by higher Chinese import, lower pricing power and company’s own issues with raw material sourcing. However, the company has managed its hurdles well during the last few quarter showing improved results.  The company has improved capacity utilization increased production by 20% in 2017 compared to the situation in 2013-16.

The company has been able to keep tabs on material costs aiding margins and return ratios. The improved prices of aluminium fluoride have also after being stagnant in the range of INR 60-70/kg for the last so many years has also helped the company. The company is almost debt free and with cash and current investment constituting 48% of total asset has offered good potential to the company for expansion.