R32 Refrigerant: Serious Overcapacity, a New Development Cycle

#1

The market share continues to increase, and the problem of overcapacity is becoming increasingly prominent.

After several years of rapid expansion in the household air conditioning industry with low price advantages, today's R32 refrigerant holds the top position in household air conditioning refrigerants. However, the industry's market share statistics for R32 air conditioners are slightly different.

According to data provided by Wang Ming, an analyst of industrial online fluorine chemicals, in the household air conditioning market in 2022, the market share of R22 models has been less than 1%, the proportion of R410A models has fallen to 10%~20%, and the proportion of R32 models is between 80%~90%. He said that in 2021, these values correspond to less than 4%, 35% and 60% respectively. The reason why the R32 model has such a high proportion is because mainstream air conditioning manufacturers such as Gree, Midea, and Haier have completed the switch of R32 refrigerant. At the 

same time, the proportion of R32 air conditioners in export models is also increasing significantly.

Gong Wenjun, general assistant of Frioflor Blue Sky Market Research Center, believes that in 2022, R22 models, R32 models and R410A models will account for about 2%, 65% and 30% of the household air conditioning market, respectively. He analyzed: "As far as the current situation is concerned, most of the production lines of large air conditioning factories have completed the switch of R32 refrigerant, and the basic ones who have not switched are  small factories.”

       Compared to the strong capacity scale of more than 500,000 tons per year, the actual production of R32 in 2022 is worrying. According to data from Huaan Securities, the output of R32 in 2021 was 244,000 tons, and the capacity utilization rate was close to 50%; In 2022, downstream demand will shrink further, and it is estimated that the capacity utilization rate of R32 refrigerant will not reach 50%. The judgment of the person in charge of Frioflor Chemical is slightly more optimistic, he believes that the capacity utilization rate of R32 refrigerant is about 60%.

"Less than 50%" or "60%", the serious overcapacity of R32 refrigerant is an indisputable fact in the industry.

#2

Bid farewell to irrational competition and enter a new stage of development

In 2023, the quota war is over, and R32 refrigerant companies must bid farewell to the previous irrational competition model and return to the essence of the commodity economy - to obtain profits, and price increases are inevitable.

According to the data of Refrigeration Express, in just over two months at the beginning of 2023, the price of R32 refrigerant has risen from 13,000 yuan / ton to 14,000 yuan / ton. Moreover, for the future market of R32 refrigerant, the industry is still bullish.

For the prospect of R32 refrigerant in the household air conditioning industry, the relevant person in charge of Frioflor Group believes: "In a short period of time, the situation of R32 refrigerant overcapacity is still difficult to change. After all, the capacity expansion of R32 refrigerant was too much, while the demand for R32 for household air conditioners was declining.”

       In addition, according to the latest report of the United Nations Intergovernmental Panel on Climate Change (IPCC), the GWP value of R32 refrigerant has been revised up to 771 from the previous 675, which is higher than the upper limit of 750 GWP value of split air conditioning refrigerant in the European Union that will take effect on January 1, 2025. Even if the EU F-Gas regulation does not adopt the new data from the IPCC, R32 refrigerants will only be allowed to be used in the EU until 2027, when air conditioners filled with R32 refrigerants may not be able to be exported to the EU market.

From the perspective of the long-term development of the household air conditioning industry, the relevant person in charge of the China Household Electrical Appliances Association believes: "R32 refrigerant is a controlled substance of the Kigali Amendment, which has been very clear. In recent years, the large-scale switch of the industry to R32 air conditioners has brought greater challenges to China's household air conditioning industry to carry out HFCs substance reduction and control in the future, and the industrial chain may face the problem of secondary conversion, which is not conducive to the long-term development of the industry.”