Middle East HFC Baseline Year Concludes: A Golden Opportunity for Chinese Refrigerant Companies

2026 is the final year of the baseline year for HFC refrigerants in A5 Group 2 (including eight Middle Eastern countries, India, and Pakistan). Quotas are determined based on the average import volume over the three years from 2024 to 2026, directly determining the import ceiling after 2028.

The Middle East has almost no domestic HFC production capacity, and the demand for air conditioning and cold chain products is strong. Importers are going all out to "boost volume to reach the baseline" and "secure supply," leading to a surge in demand for Chinese products.

1. Global Supply Side: China's Irreplaceable Monopoly

- China accounts for over 60% of global HFC production capacity, making it the only country with a large-scale, stable supply capacity.

- In 2026, China's total HFC quota is 797,800 tons, with only 394,100 tons for domestic use, leaving approximately 400,000 tons available for export, providing ample supply to the Middle East.

- Other countries are limited by quotas (Europe and the US have entered a reduction period) or have insufficient capacity, unable to meet the surging demand from the Middle East.

2. Enterprise Level: Triple Leadership in Quotas + Industrial Chain + Product Variety

Competitive Dimension: Juhua Group, Sanmei Group; Industry Significance

Quota Advantage: HFCs quota of 299,900 tons, accounting for 39.6% of the national total, an absolute leader; HFCs quota of 129,800 tons, with a leading market share in mainstream varieties; Quota = Capacity = Export Rights, leading companies control pricing power.

Industrial Chain: The only domestic company producing a full range of fourth-generation refrigerants, integrating fluorite-hydrofluoric acid-refrigerant; Complete upstream raw material support, ranking first in the country for R134a (23.97%). Significant cost advantages and strong risk resistance.

Sufficient quotas are available for high-GWP refrigerants such as R125/R404A/R507; leading technology in refrigerant blending meets the specific needs of the Middle East; the increased proportion of high-value-added products boosts profits.

3. Demand Side: The Catalyst Effect of the Middle East Buying Spree

- Importers are willing to pay premiums to increase their baseline quotas, driving up Chinese export prices.

- High-GWP refrigerants (R404A/R507/R125) will see larger price increases due to faster future reductions, resulting in high profit elasticity for Chinese companies.

- The escalating tensions in the Middle East have made China's stable supply chain a "safe haven," further consolidating cooperative relationships.