After three years of bidding farewell to the “quota competition”, the refrigerant industry is finally about to usher in a “spring”.
According to monitoring data from Baichuan Yingfu, from 13,300 yuan per ton at the beginning of this year to over 14,300 yuan per ton on February 22, the mainstream third-generation refrigerant R32 has increased by over 10% since 2023. In addition, the prices of the third generation refrigerants of multiple other models have also increased to varying degrees.
Recently, a number of senior executives of listed fluorine chemical companies told the Shanghai Securities Journal that the refrigerant industry is expected to turn around losses in 2023, and with the economic recovery and the continuous expansion of downstream application scenarios, it is expected that the refrigerant market demand will continue to improve in the next few years.
Shouchuang Securities stated in its latest research report that after the end of the benchmark period for third-generation refrigerants, it is expected that the industry will experience price difference repair and bottoming out rebound in 2023, while the quota for third-generation refrigerants will be concentrated towards industry leaders. Against the backdrop of the continuous reduction of second-generation refrigerant quotas and the high cost and limited application of fourth-generation refrigerants, the competitive landscape of the third-generation refrigerant industry will undergo fundamental changes or usher in a long-term upward boom cycle.
Market supply tends to balance
The period from 2020 to 2022 is the benchmark period for China’s third-generation refrigerants in accordance with the Kigali Amendment to the Montreal Protocol. Due to the production and sales situation in these three years being the benchmark for future refrigerant quotas, various production enterprises have expanded their production capacity and seized market share by building new production lines or renovating production lines. This has led to an oversupply in the third-generation refrigerant market, greatly affecting the profitability of related enterprises.
According to authoritative agency data, as of the end of 2022, the production capacity of China’s third-generation refrigerants R32, R125, and R134a has reached 507000 tons, 285000 tons, and 300000 tons, respectively, an increase of 86%, 39%, and 5% compared to 2018.
While manufacturers are trying to expand production, the performance of downstream demand side of refrigerant is not “awesome”. Several industry insiders told reporters that in the past three years, due to poor demand in the downstream home appliance industry and oversupply, the profitability of enterprises in the industry has significantly decreased, and the industry is at the bottom of the boom.
Since the beginning of this year, with the end of the benchmark period for third-generation refrigerants, various refrigerant enterprises are rapidly restoring market supply and demand balance by shrinking production capacity.
A person in charge of a listed company told reporters that the national quota for third-generation refrigerants has not yet been announced, but refrigerant enterprises no longer need to produce at high loads, but rather determine production based on market supply and demand. A decrease in supply will be beneficial for the stabilization and recovery of refrigerant prices.
Post time: Jul-07-2023