Refrigerant Prices Return To High Level, Why Raw Material still Depressed?

Raw material prices did not follow the rise of refrigerant products downstream, but hovered at a low level. 

The reasons are as follows:

1.The prices of liquid chlorine and calcium carbide and other raw materials are decreasing year by year. 

Since 2022, the average annual price of calcium carbide in Wuhai area of Inner Mongolia has decreased from 3900 yuan/ton to 2700 yuan/ton. The annual average price of methanol in Inner Mongolia decreased from 2315 yuan/ton to 2085/ton. The price of liquid chlorine in Shandong dropped from Rmb333/t to Rmb155/t. 2、 The contradiction between the incremental supply of raw materials and the limited downstream demand highlights the rapid release of new refrigerant capacity in the baseline year, which stimulates raw material producers to expand their production capacity accordingly, and the industry supply increases significantly. However, since the quota production of HFCs was implemented in 2024, the contradiction between the scale of refrigerant supply locked and the increase of raw material supply has become prominent, leading to a decrease in raw material prices instead of increasing.

2. Refrigerant enterprises have a high self-supply rate of raw materials 

As leading enterprises continue to expand the industrial chain, the industry concentration gradually increases. For example, leading enterprises such as Dongyue and FRIOFLOR are also in the leading position in the production of raw materials such as methane chloride. The basic realization of raw material products self-produced and self-marketing, reducing the raw material price volatility. In summary, the price of refrigerant raw materials is mainly affected by the changes in their own supply, the fluctuation of upstream raw material (commodity) prices, and downstream demand. During the baseline year, refrigerant products increased more, while the corresponding auxiliary materials expanded less, the price of products increased significantly, and even reached a historical high in recent years. With the implementation of the quota policy in the future, the supply and demand pattern of refrigerants and raw materials will be basically locked. Therefore, the supply and demand relationship will continue to be relaxed as a whole, and it will be difficult for the raw material prices to rise. The price trends of different raw materials and products may be affected by the fluctuations in their own costs, the concentration of effective demand, imports and exports, and the self-sufficiency rate of refrigerant enterprises.