China’s fluorochemicals business will boom in peak season of coolants, Q2 2017 03-08-2017

China’s fluorochemicals industry is witnessing a price hike at the moment, which is going to be even enhanced by the approaching peak season of sales for refrigerants and air conditioners. As a result, the fluorine-enriched refrigerant industry is enjoying a positive development as well.


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The second quarter of the year is traditional the peak season of sales for coolants like refrigeration and air conditioning in China, thanks to the coming summer and hence increasing temperatures. Strongly bound to the success of these coolants, China’s fluorochemicals will benefit from the peak of sales, since they are one of the main raw materials.

 

In fact, already the month February has witnessed price rises of fluorochemicals in China, which have mainly occurred by the tight supply situation at the moment, according to market intelligence firm CCM. Most of the upstream products for fluorochemicals, like fluorite, also have seen price surges in February, supporting the upgoing price trend even more. The price of fluorite, for example, was raised by USD29.17/t, according to CCM’s price monitoring.

 

The tight supply of fluorochemicals in China these days has several reasons, which all play together. First of all, the winter in China, which was marked by heavy snowfall in the northern part of the country, has hindered the production and transportation of some manufacturers, which shortened the supply at first. In addition, the Chinese government has started to implement strict environmental regulations for China’s manufacturers in heavy polluting industries. Hence, many manufacturers were forced to limit or even stop their production until they fulfil the environmental standards for the production. Finally, even some manufacturers did not get the renewal for the mining certificates, when they did not pass the environmental checks.

 

The price rises, which are caused by the bespoke tight supply, are likely to continue even more in the second quarter of 2017, due to the peak sales season of refrigerants and air conditioners. This will especially affect the price of fluorine, which are used in fluorine-enriched refrigerants.

 

As the downstream business of fluorochemicals, the fluorine-enriched refrigerants industry has witnessed price surges in the beginning of 2017 as well. According to CCM, there are three main factors, which are driving the price for fluorine-enriched refrigerants in China. 

 

 


The first factor can be found in increasing prices of raw materials. The raw materials for fluorine-enriched refrigerants have undergone serious price rises, due to the environmental protection measurements in China as well as a new road safety law, which regulates the transport with trucks more strictly and causes higher punishments for non-obeying. Thus, the supply of raw materials grew tighter with an obvious effect on the price.

 

The environmental protection measurements have also affected the manufacturers directly, with improved standards for pollution discharge and increasing rectifications. Hence, the production was limited, which led to a higher price, because of short supply.

 

Finally, the third factor can be found in an increased demand for air conditioners, due to price rises and therefore the attempt of distributors to fill their stock before the prices rise even more.

 

What is driving the demand for air conditioners in China is the booming automobile market, which saw a growth of 14% in 2016 compared to 2015.

 

What’s more, foreign demand for HCFC and HFC is going to drop down quickly in the future, since most of the countries agreed to relinquish on this fluorochemicals in order to protect the ozone layer from being dismantled. According to CCM, the purchase in China will increase when there is a supply shortage in the fluoropolymer and air conditioner maintenance business.

 

Geographically, The APAC region is expected to establish as the leading supplier to the global fluorochemicals market by seizing around 40% of global volume. China will continue to be the leading producer.

 

About CCM

CCM is the leading market intelligence provider for China’s agriculture, chemicals, food & ingredients and life science markets.

 

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