China’s
refrigerants are witnessing higher prices and huge demand, due to growing
downstream markets and limited supply worldwide. However, China’s industry
needs to switch to alternative refrigerants, looking at the Phase-out of HCFC
and surging demand for natural refrigerants.
Source: Pixabay
After
the spring festival in February, China’s sales of fluorochemicals was able to
recover to some extent, but the production still remained low. Fluorite and
refrigerants prices have been surging as the result of this low supply.
According
to market intelligence firm CCM, some of the major refrigerants in China even
witnessed rises up by 50% in the beginning of 2017. Besides the low supply in
domestic markets, also the worldwide HFC capacity is facing a reduced volume,
which drives the price for refrigerants up. Furthermore, strengthened
environmental protection measurements in China are causing huge pressure on
manufacturers, leading to increasing costs and limited production.
After
all, the environmental pressure has forced production of Chinese HFC down by
about 20% currently. As especially small and medium-sized manufacturers are not
able to invest in cleaner production, larger manufacturers can use the reduced
supply of refrigerants to quote higher prices for their products.
China
has become the largest producer of HFC, one of the major refrigerants used
nowadays. Due to the low price, foreign enterprises can hardly compete with
Chinese refrigerants on the world market. The USA, for example, is consuming
almost all of the produced refrigerants by itself, while Other major markets
like Europe and Japan can’t compete with the low production costs. Hence, as
the demand for refrigerants is at an all-time high, China serves as the main
supplying nation.
Air
conditioners application was the largest downstream market for refrigerants in
2016, according to Marketwatch. The same segment is expected to remain the
largest market in the following period from 2017 to 2022. The largest growth
region is hereby Asia-Pacific. Looking deeper at refrigerants, hydrocarbons are
likely to be the fasts group of refrigerants growing in the market.
Huge
investments in infrastructure, domestic residential projects and growing
urbanisation have led the Asia-Pacific region to the largest market for
refrigerants in 2017, a trend this is likely to go on to the next decade.
On
the other side, demand for fluorocarbon may decline in the near future, due to
the phase-out of HCFC and HFC by the middle of this century. This trend is
leading manufacturers to turn their eyes on alternative refrigerants.
One
solution might be natural refrigerants like C02, hydrocarbons, and ammonia.
However, the demand will be higher than the supply of those in the near future,
according to markets experts’ opinion.
China
is also taking part in the new direction for refrigerants, as latest efforts
and discussion, for example at the China Refrigeration 2017 in Shanghai show.
Leading manufacturer executives have announced their efforts in investing in
eco-friendly refrigeration technology.
One
of the projects, which are highly supported by the government as part of the
HCFC Phase-out Management Plan, deals with transcritical CO2 systems in China.
The biggest challenge for China might be to reach the countless small and medium-sized
manufacturers in China, which play a huge role in China’s refrigeration
production.
What’s
more, China is also the largest producer of fluorspar, a mineral which is used
in the production of HFC. This mineral has reached the highest price in the
last four years in China. This will inevitably put further pressure on domestic
and global refrigerant gas prices. As a fact, China is the supplier of
more than half of the worldwide fluorspar trade, which makes price hikes in
this country very meaningful to the world market. The increase in prices can be
explained with the stricter environmental measurements in China, which put
pressure on the production of HFC as well as the mining of fluorspar itself.
Dealing
with the low prices of Chinese refrigerants, earlier in 2017, the U.S.
Department of Commerce had announced the final anti-dumping duties on Chinese
refrigerants, claiming the price have been unfairly low. The final dumping
margin was set to 167.02.
Chinese
refrigerants have been determined as dumping in the USA before. In June of
2016, Chinese importers of HFC blends and components were assigned dumping
margins up to 216% at that time. The claims for the investigation came from
American manufacturers, who complained about unfairly traded imports from
China. In the beginning of the year 2016, anti-dumping duties of up to 210%
have been announced for certain HFC refrigerants.
About CCM
CCM
is the leading market intelligence provider for China’s agriculture, chemicals,
food & ingredients and life science markets.
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