What is the Future of HFC Pricing?

Yesterday I wrote an article detailing the announcement by the EPA to begin phase out of HFC refrigerants across the United States. This first announcement covers R-134a and R-404A. (Others are included, but these are the biggest affected.) The article can be found by clicking here.

Now that these changes have been announced the next question on everyone’s mind is what is going to happen to the price on these HFC refrigerants? We all know what occurred with R-22’s price once the phase out began. Back in the hay day when R-22 was as popular as ever the price was around one-hundred dollars a cylinder. Today that price has all but tripled to about three-hundred dollars per cylinder.

R-134a

We have a little bit of time on R-134a before any real changes occur. The deadline for R-134a being discontinued that was given by the EPA is the year 2021. (There is an exception for exports out of the country, that cut off is year 2025)

I predict that after this ruling was announced yesterday that the price of R-134a will jump a bit over the next few weeks, but we will not see any substantial as far as price increases. 2021 is still six years away and I feel that the market will go back to the status quo after some times passes and it is accepted that 134a will be going away.

As we edge closer to 2021 I can definitely see the pricing began to creep up, but as I said before this is most likely a few years down the road. I think for the 2015 year we should be fairly stable, most likely even into 2016.

R-404A

R-404A is a whole different story compared to 134a. The deadline is much shorter on 404A. The supermarket industry is given until January 1st, 2017. Vending machines are given a little bit more leeway and given the year January 1st, 2019. The thing to keep in mind though is that January 1st, 2017 is less than a two years away. In fact, it’s only eighteen months out.

I predict the price of R-404A to start climbing and fast. Companies are being incentivized to use alternatives to R-404A and now we are facing ban on using 404A in new applications in as early as eighteen months. I wouldn’t be surprised if we saw the price double over the next year and maybe even triple as we enter 2017.

Conclusion

Keep a vigilant eye on your HFC pricing. If you began to see a rapid climb in pricing now may be the time to buy up and store it in your warehouse. After yesterday’s ruling I highly doubt pricing will fall, it will most likely only go up.

Thanks for reading,

Alec Johnson

Owner.

 

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