[Introduction] In May, pricing for anhydrous hydrogen fluoride continued its sharp upward trend. The pricing focus in the East China market was concentrated in the range of 14,800-15,000 RMB/ton, with an increase of around 1,300 RMB/ton. The cost pressure in the Shandong market was slightly lower, with the pricing focus concentrated at 14,450 RMB/ton, up by 1,150 RMB/ton.

Profit-side positives gradually emerge, driving up plant operating rates

| | March | April E | MoM Change | May E | June E |
| -------------- | ----- | ------- | ---------- | ----- | ------ |
| -- Production | 15.4 | 18.1 | +17.53% | 17.5 | 17.8 |
| Total Supply | 15.4 | 18.1 | +17.53% | 17.5 | 17.8 |
| -- Downstream Consumption | 13.5 | 13 | -3.70% | 14 | 13.5 |
| -- Exports | 1.3 | 1.9 | +46.15% | 2 | 1.5 |
| Total Demand | 14.8 | 14.9 | +0.68% | 16 | 15 |
| Supply-Demand Gap | 0.6 | 3.2 | +433.33% | 1.5 | 2.8 |

The domestic anhydrous hydrogen fluoride market is digesting the price increases, with a strong wait-and-see sentiment. After the implementation of the new monthly pricing, the profit margins of production enterprises turned from loss to profit. Consequently, after the holiday period, capacity utilization rates rose sharply. Enterprises that had previously halted production or were operating at low loads have resumed or are running at full capacity, while some continuously stable operations have maintained their production pace. The supply increase in the market is evident, but negative factors are gradually emerging. First, the recent continued rise in the sulfur market has led market participants to observe the driving force on the sulfuric acid market. Second, demand remains stable while supply has increased significantly, leading to a supply-demand imbalance. The market's one-sided push to increase operating rates poses a risk of destabilizing future market trends. As of press time, the mainstream delivered price in the domestic anhydrous hydrogen fluoride market for May is referenced at 14,450-15,000 RMB/ton.

Sulfur scales new heights, deepening market's wait-and-see attitude toward sulfuric acid

The domestic sulfur market is in a multi-faceted tug-of-war. The high price of granular sulfur at ports reached 7,320 RMB/ton. With international tensions and signs of the Strait opening, the market experienced high-level volatility. As of now, the mainstream price of granular sulfur in Zhenjiang Port is 6,900 RMB/ton, up 200 RMB/ton from last Thursday, an increase of 2.98%. On the foreign market side, transaction prices in the southern African market exceeded $1,200/ton. However, the Indonesian market is currently rejecting high-priced sulfur at $1,200/ton. Indonesia's wet-process nickel plants have also been reducing production due to high raw material prices. According to data, most Indonesian wet-process nickel operations have cut capacity by 30%-50%, but Huayou's new wet-process nickel project is expected to come online gradually in the second quarter, which may support market demand. In China, there have been no new high-price USD transaction negotiations yet, but based on USD market news, CFR China prices stand at $920/ton, indicating that China's USD-denominated prices are also gradually rising.

The domestic sulfuric acid market continues to diverge, with localized increases and decreases. Raw material support is extremely strong, as sulfur prices continue to surge sharply and broke through the 7,000 RMB/ton mark this week, providing strong cost support. On the supply side, acid plants in many domestic regions have successively entered maintenance periods. Coupled with high sulfur prices leading to production cuts by some acid enterprises, supply is contracting. On the demand side, downstream purchasing is cautious, but just-in-time replenishment remains. This week, acid prices in East China, Northeast China, Hunan and Henan in Central China, and Fujian in South China were raised, with increases mostly ranging from 50-200 RMB/ton. The Yunnan market saw localized price corrections due to changes in supply and demand within the region. Overall, the domestic sulfuric acid market maintains a strong and firm trend, supported by high costs and just-in-time demand. As of now, the ex-factory price of 98% smelter acid in Hubei is around 1,550-1,800 RMB/ton, up 3.33%/0.00% from last week; in the Yunnan market, the ex-factory price of 98% smelter acid is 1,610-1,790 RMB/ton, down 5.85%/0.00% from last week.