CCM: China’s HCFC-22 producers to target at air conditioner maintenance market 05-23-2016

In Q2 2016 (the traditional peak period for the production and sales of air conditioners), the price of difluorochloromethane (HCFC-22) again shows upturns in China. For instance, the average quoted price was around USD1,471/t (RMB9,500/t) in early May, up by about 6% over early March.



Source: Baidu


However, compared to USD2,168/t (RMB14,000/t) in early May 2015, it was down by about 32%, showing significant falls.
This is in close relation to the demand changes.


In China, HCFC-22 is mainly for air conditioner manufacturing, maintenance and export, combined consumption making up 95% of the total. Specifically, the demands from air conditioner manufacturing and export business are decreasing. This is mainly because:


- The production and sales of variable frequency air conditioners are increasing, about 55% of the total in 2015. Comparatively, the production and sales of fixed frequency air conditioners using HCFC-22, are decreasing.


- The developed countries have basically banned the use of hydrochloroflurocarbons (HCFCs) in related new devices (such as air conditioners), of which the EU has universally prohibited the use of HCFCs since 2015. In this context, the channels for the export of HCFC-22 are narrowing down, mainly to the developing countries now.


China has already stepped into the Stage 2 (2016-2020, cut by 35%) for the elimination of HCFCs. This means that the reduction in HCFC-22 production quota will be accelerated. Under this, the domestic producers will be inclining to the sales of HCFC-22 in small packing.



 

CCM believes that the air conditioner maintenance market will be a key target for the HCFC-22 business layout in the future.


In recent years, the domestic air conditioner industry, impacted by policies, has been developing more for energy conservation and environmental protection. However, the HCFC-22 air conditioner segment, after years of development, has a huge penetration, about 200 million units. Correspondingly, there should be a big maintenance market: demand from this business accounted for nearly 40% of the total in 2015.


“The HCFC-22 air conditioner penetration has not yet showed negative growths and will maintain stable in the long run,” trade sources commented to CCM, “The propane (R290) air conditioners which are strongly supported by the government to replace HCFC-22 ones, are easy to cause burning and explosion.

 

For this, improvements in technology regulation and training are needed to make all links such as transportation and installation safe. So, it will take a long period for R290 air conditioners to be widely promoted.”


Notably, the domestic air conditioner maintenance market regulation is fairly poor. Many regular HCFC-22 producers (allowed to produce HCFC-22 within quota) are facing challenges during the business layout, especially involving the HCFC-22 produced by “underground” plants which are out of quota, and inferior and counterfeited HCFC-22 produced by illegal manufacturers. This brings low-price threats and brand image damages.


In the future, the regular producers are expected to cooperate with all-level governments to bring those “underground” plants in light and beat them, and to increase input in security design, so as to strengthen their capability and competitiveness in the maintenance segment.


This article comes from China Fluoride Materials Monthly Report 1605, CCM




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. CCM is a brand of Kcomber Inc.

 

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Tag: HCFC  Fluoride


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