Refrigerant Gas Threshold: Production According to Quota Will Have Huge Effects on Price

Environmental protection and control are becoming increasingly strict, and the supply of fluorite and hydrofluoric acid is gradually tightening.

As a non-renewable resource, fluorite is the basis for the downstream development of fluorine chemicals. According to statistics, the

domestic fluorite ore reserves are about 42 million tons, accounting for about 13.1% of the world, but the average grade is only

34.7%. From the perspective of output, China is the world's largest producer of fluorite, accounting for about 65.5% of the world's 

output, and the mining and storage ratio is far lower than the world average. With the implementation of national protective policies, 

the requirements for environmental protection and safe production have become increasingly strict, and the domestic fluorite supply 

has gradually tightened. Hydrofluoric acid is a key intermediate in the fluorine chemical industry, on the one hand, the tightening of 

fluorite supply will inevitably affect the production of hydrofluoric acid, on the other hand, environmental protection restricts the 

expansion of hydrofluoric acid industry, under the downstream demand pull, it is expected that the supply and demand pattern of 

hydrofluoric acid in the future is expected to continue to improve, and profitability is expected to increase.

The quota of the third generation of refrigerants is about to settle, the industry's long-term boom cycle reverses upward, and the 

leading enterprises are strong and strong.

According to the Kigali Amendment agreed by Parties to the Montreal Protocol, HFCs (third-generation refrigerants) will be phased 

down, and according to the exposure draft, it is expected that the base limit for third-generation refrigerants will be the average of 

GWP emitted by HFCs industry-wide in 2020-2022 + 65% of the baseline value of HCFCs (second-generation refrigerants). 

Therefore, expanding production and improving operating rate is the primary task of third-generation refrigerant enterprises in the 

base year, while the downstream automotive and real estate fields have poor demand, the contradiction between supply and 

demand is prominent, product profitability maintains a bottom shock, and some mainstream products R32 and R134a are in a loss 

state in the whole industry. At the end of 2022, the baseline year of the third-generation refrigerant quota will end, and the 

implementation of quota production will begin in 2024, and the industry will return to the benefit-oriented pattern again in 2023, and 

the fluorine chemical industry is expected to turn upward. According to the bank's calculations, it is expected that the quotas of the 

three generations of refrigerants of domestic refrigerant leaders Juhua Shares (FRIOFLOR is one of the shareholders), Sanmei Shares and Yonghe Shares will account for 32.8%, 17.9% and 7.7% respectively, with high industry concentration and high flexibility in the performance of leading enterprises in price increases.