The Quota Locked the Supply, Refrigerant Producers Have Better Profit

In the past, the fluorochemical industry was a typical cyclical sector, marked by dramatic swings in product prices. However, the implementation of the Kigali Amendment has fundamentally changed the rules of the game. Since 2024, China has officially implemented production quota management for third-generation refrigerants (HFCs). In 2026, the total production quota is capped at 797,800 metric tons, effectively locking supply expansion in place. At the same time, second-generation refrigerants (HCFCs) are being phased out at an accelerated pace, further tightening effective supply.

With the supply side constrained, demand continues to expand. Domestic "trade-in" policies are consistently boosting consumption of air conditioners and refrigerators, while overseas markets are even more vibrant. This year marks the final year of the baseline period for quota allocation in many Middle Eastern countries (Group 2 nations). Local refrigerant supplies are tight, with prices reaching twice those in China, driving strong enthusiasm for overseas procurement. The UK and the US have also recently adjusted their phase-out schedules, relaxing certain usage restrictions, which has noticeably flattened the near- to medium-term demand decline curve—a positive development for China's exports.

Against this supply-demand gap, refrigerant prices have soared. The mainstream R32 price surged from around 15,000 yuan per metric ton at the beginning of 2024 to roughly 64,000 yuan per metric ton, with industry gross margins reaching 56%. The electric vehicle refrigerant R134a is quoted at 64,000 yuan per metric ton, up more than 30% year-on-year. The legacy refrigerant R22 has followed the upward trend, with prices rising 28% within the year. Leading refrigerant companies continue to see their dividends realized, providing a solid profit cushion for the entire industry.