Hidden Worries Emerge Behind the Rapid Growth of R32 Refrigerant

Following the severe overcapacity of R32 refrigerant in 2019, the price of R32 refrigerant fell below the cost line, and the outbreak of domestic and foreign epidemics in 2020 forced the price of R32 refrigerant to drop. What is quite dramatic is that the application of R32 refrigerant in household air-conditioning has shown a prosperous scene, with a market share of close to 60%, and the status of the largest refrigerant in the household air-conditioning industry is veritable. However, the Kigali amendment has come into effect, and the transitional status of R32 refrigerant is beyond doubt. As HFCs refrigerants begin to undergo quota production, the fate of R32 refrigerants will face challenges.

R32 refrigerant gas application ratio climbs

In 2019, the market share of R32 air conditioners has increased significantly. According to industry online data, the market share of R32 air conditioners in 2019 was 39.2%, R410A air conditioners were 36.5%, and R22 air conditioners were 24.3%; in 2020, the market share of R32 air conditioners rose rapidly to 54.2%, R410A air conditioners were 36.0%, and R22 air conditioners were 36.0%. 9.5%.

It can be seen from the data that in 2020, the market share of R410A air conditioners will slightly decline, and the share of R22 air conditioners will be given to R32 refrigerant, which has become the most used refrigerant in the household air conditioner industry. From a single brand point of view, the share of R32 air conditioners may be higher. According to an industry insider, Gree R32 air conditioners may account for 90% in 2020, and Midea’s R32 air conditioners are estimated to account for 70%.

Talking about the reasons for the rapid increase in the market share of R32 air-conditioning, a person in charge of a refrigerant company in Shandong said that on the one hand, R32 refrigerant is more expensive than R410A refrigerant and R22 refrigerant due to overcapacity; on the other hand, R32 air-conditioning system The cost is lower. He bluntly said: "At present, the only factor affecting the promotion of R32 air conditioners is flammability. The safety category of R32 refrigerant is A2L. If R32 refrigerant does not have such problems, the market share may be higher."

However, the outlook of R32 refrigerant in the household air-conditioning industry in 2020 has a huge contrast with the real profits of the production enterprises. Beginning in 2019, as R32 refrigerant is about to enter the year of rapid quota change, in order to compete for the quota, in addition to fluorine refrigerant companies, companies in other industries have joined the production of R32 refrigerant, resulting in a serious overcapacity of R32 refrigerant, and the price has hit Cost line. In 2020, superimposed on the impact of the new crown epidemic and sluggish downstream demand, the price of R32 refrigerant continues to drop, and companies are losing money.

When collecting R32 refrigerant price trend data, the reporter of "Electrical Appliances" found that the price of R32 refrigerant at the beginning of 2019 was about 13,000 yuan/ton, and it had fallen to about 11,000 yuan/ton by the end of 2020.

Regarding the price trend of R32 refrigerant in 2021, the relevant person in charge of Meilan Chemical predicts that although the demand for R32 refrigerant may increase in 2021, the overcapacity of R32 refrigerant will not be alleviated. In the short term, it may be affected by factors such as factory maintenance and raw material price increases. There will be a tight supply situation, and the price will rise periodically, but most of the time, it will still fluctuate between the cost line and the line.

Hidden dangers in future prospects

According to the provisions of the Kigali Amendment, China and other developing countries will freeze the production and consumption of HFC refrigerants from 2024, and gradually reduce HFC refrigerants from 2029. The reduced quota will be calculated based on the sum of the average production/consumption of HFCs from 2020 to 2022 and the production of HCFCs at the baseline level of 65% + consumption (2009-2010). With reference to the previous HCFCs phase-out policy, the HFCs capacity newly put into production after January 1, 2020 will not be eligible for quotas.

From this perspective, 2020-2022 is the quota base period for R32 refrigerant. Gong Wenjun, the general assistant of Sinochem Blue Sky Market Development Center, believes that the market share of HFCs refrigerants of various enterprises will determine the proportion of quotas obtained in the future. Before 2020, domestic companies are actively expanding production, and refrigerants such as R32 have a serious overcapacity. The 2020 quota base year is to compete for quotas, and low-price competition will result in industry losses. In the context of the loss of the fluorine refrigerant industry, some of the newly commissioned installations have not been put into operation, and the overall supply and demand are balanced.

According to an industry insider's estimation, the current domestic production capacity of R32 refrigerant has exceeded 400,000 tons, and there are about 17 companies entering the company. Among mainstream companies, Dongyue Group’s R32 refrigerant production capacity is 60,000 tons/year, Juhua’s R32 refrigerant production capacity is approximately 60,000 tons/year, and Meilan Chemical’s R32 refrigerant production capacity is 40,000 tons/year. In 2009, the production capacity of Sinochem Lantian R32 refrigerant was 40,000 tons/year. In addition, most of the remaining companies have relatively small production capacity.

In fact, the irrational competition in the R32 refrigerant industry has caused some small-scale companies to withdraw sadly because of the pressure to lose money, while other large-scale companies can offset the pressure and move forward stubbornly because of the large number of industries. In this context, most companies have no plans to expand the production of R32 refrigerant, and more are through technological improvements to reduce production costs and increase production capacity.

Regarding the rapid application of R32 refrigerant in the household air-conditioning industry, the relevant person in charge of China Household Electrical Appliances Association analyzed from the perspective of the long-term development of China’s household air-conditioning industry: “The GWP value of R32 refrigerant is lower than that of R410A refrigerant. The result of air-conditioning is to reduce the baseline value of HFCs in our industry by about two-thirds from 2020 to 2022. This will bring greater challenges to China’s household air-conditioning industry to implement HFCs reduction control in the future, which is very unfavorable for the long-term development of the industry of."