In
March 2016, China’s HFC-32 price stayed low, indicating that the coming peak
period for air conditioner has not yet brought significant drives. CCM believes
that this is mainly because the market was suppressed by overcapacity. The
HFC-32 segment is in urgent need of supply-side reform.
In March 2016, the prices of bulk commodities such as
crude oil rebounded, mainly stimulated by the domestic loose currency policy
and the supply-side reform policy. However, the fluorochemical market,
stationed in the terminal branch of the chemical industry, showed fairly flat
performance: prices mostly stayed low.
Particularly in the fluorine-enriched refrigerant segment, the market
performance was still poor, despite the coming of the peak period for the
refrigeration and air conditioning industry.
Difluoromethane (HFC-32), as the only fluorine-enriched refrigerant listed in
the First Catalogue of Recommended Substitutes for HCFCs (HCFC=
hydrochlorofluorocarbon), received great attention in 2015. Meanwhile, the
domestic refrigeration and air conditioning industry also planned to apply this
refrigerant in the large- and medium-sized air conditioner during upgrading for
environmental protection. For instance, Gree Electric Appliances, Inc. of
Zhuhai has already begun producing HFC-32 air conditioner.
For this, the HFC-32 market trend is expected to go upward. However in the
first half of March, the average quoted price of HFC-32 was USD1,713/t
(RMB11,200/t), down by nearly 20% YoY.
CCM believes that the HFC-32 segment trapped in
overcapacity, is in urgent need of supply-side reform.
According to CCM’s research, the domestic production capacity of HFC-32 was
about 260,000 t/a in 2015, however demand at only about 90,000 tonnes. The
oversupply was very obvious.
Specifically regarding demand, the downstream demand for HFC-32 now mainly
comes from the production of R410a (a 1:1 mixture of HFC-32 and
pentafluoroethane – HFC-125). However the domestic air conditioner enterprises
are now facing high inventory and sales pressure, which somehow draw back the
R410a shipment.
It is expected that in 2016, the demand for HFC-32 air conditioner will
increase. In addition, the proportion of variable frequency air conditioner
increases further. All this will increase the total demand to about 100,000
tonnes.
Some HFC-32 enterprises such as Shandong Haiyi Environmental Protection Co.,
Ltd. and Qinghai Tongxin Chemical Co., Ltd., holding positive attitude towards
the future upgrading for environmental protection, will continue putting new
production lines into operation. This will intensify the overcapacity.
In view of supply-side reform, it is necessary to establish the mechanism for
capacity pre-warning and control, encourage the M&A and enlarge the
integration.
In addition, during the supply-side reform, it is necessary to run down the
stock by exports. However, as the US, one of the top 5 export destination for
HFC-32, is making anti-dumping investigation into hydrofluorocarbons (HFCs)
from China, the exports probably will be threatened significantly. Under this,
the earlier implementation of the supply-side reform will be more favourable
for the HFC-32 segment development.
In July 2015, the United States Department of Commerce launched the
anti-dumping investigation into HFCs from China. In Jan. 2016, it released the
preliminary results, to levy 91.99-210.46% anti-dumping duties. Accordingly,
the final determination will be unveiled in June this year.
About CCM:
CCM is the leading market intelligence provider for China’s agriculture, chemicals, food & ingredients and life science markets. Founded in 2001, CCM offers a range of data and content solutions, from price and trade data to industry newsletters and customized market research reports. Our clients include Monsanto, DuPont, Shell, Bayer, and Syngenta.
For more information about CCM, please visit www.cnchemicals.com or get in touch with us directly by emailingecontact@cnchemicals.com or calling +86-20-37616606.
Tag: HFC-32