There’s a soft place in my heart for R-134a refrigerant. Yes, I realize how strange that sounds but this is THE refrigerant that started it all for me. This was the refrigerant that introduced me to the industry. About eleven years ago I was in charge of purchasing R-134a refrigerant for a dealership group headquartered out of the Kansas City area. I would research the refrigerant, I would find the best price, I would negotiate between vendors, I would co-ordinate twenty pallet trailer loads. I could go on and on about it.
Most of you know that I came from the automotive side of the industry and on the auto side R-134a is king. A little over twenty years or so ago R-12 was the auto king but ever since then the reign of 134a has been pretty good. This may all be changing over the next few years though with the introduction of the HFO-1234yf and planned phase outs of HFC refrigerants like 134a.
The question on everybody’s mind though is what will the price of 134a do in 2018? How are the anti-dumping tariffs affecting it? Phase outs? YF? Will the price stay flat, jump, or sink dramatically? Let’s dive in and find out!
Like with any good analysis we have to look at the considerations and outside factors that will affect the price on R-134a in 2018 before we can make an attempt at an accurate price prediction for next summer. Let’s take a look:
- Most of you within the industry have heard about or have even been following the drama on anti-dumping duties or tariffs on Chinese imported HFC refrigerants. This battle has been going back and forth between companies and the International Trade Commission for years. The basis of the complaint is that China is dumping dirty cheap HFC product, like R-134a, into the United States marketplace. This Chinese government subsidized refrigerant allows China to bring this stuff into the States at dirt cheap prices. The US companies, and other EU companies, just can’t compete and end up either making little or nothing on their 134a sales. The case had been rejected or ruled against quite a few times but in March of this year the Trade Commission ruled in favor of the American HFC Coalition. (The coalition was a banded group of refrigerant manufacturers and distributors.) The duty levied against Chinese imported R-134a was set between 148.79% to 167.02%. What that means is if you bring in a Chinese cylinder at $45.00 that your cost would be $66.96 after the tariffs have been applied. ($45.00 * 1.4879 = $66.955) That price of $66.96 puts the Chinese product right in line with the US and other products in the marketplace.
- With each passing year more and more automobiles are using 1234yf. This trend started in the European Union and now any new models in the EU are banned from using R-134a. This same type of change is coming here to the United States. The first major manufacturers to start using YF in the states started in 2013-2014. After that each year brings more models and manufacturers into the fold. Don’t believe me? Go and look under the hood of a 2018 Toyota Tundra. You’ll find a YF system in there. No more R-134a. While this slow transition won’t have much of an impact for 2018 we will begin to see the market erode out from under 134a as the time goes on.
- One point that I want to bring up is raw materials increase on R-134a. I received an e-mail from a reader the other day. This reader showed me a notification that he received from Mexichem. This letter informed him that he would be receiving a $00.75 increase per pound on R-134a for the 2018 year. That’s $22.50 a cylinder! While this is the only notification that I have seen of this so far it very well may be across the industry. This also may be companies capitalizing on the tariff and the extra profits they can get without the Chinese imports being around.
- Remember how I mentioned that the EU had banned R-134a to be used in newer car models? Well, the same thing is coming here folks. The EPA announced their phase out in the summer of 2015 under their ‘SNAP Rule 20,’ program. It basically said that R-134a would be unacceptable for use in new vehicles starting at the 2021 model year. While this Rule 20 from the EPA is contested in the courts right now the rest of the world is treating these phase outs as still active and ongoing. I am going to write my prediction here assuming that the EPA’s planned phase out stands. For more information on the EPA’s phase out of R-134a click here or you can read the excerpt from their site in the bulleted points below:
- Unacceptable as of Model Year (MY) 2021, except where allowed under a narrowed use limit through MY 2025.
- Acceptable, subject to narrowed use limits, for vehicles exported to countries with insufficient servicing infrastructure to support other alternatives, for MY 2021 through MY 2025.
- Unacceptable for all newly manufactured vehicles as of MY 2026.
I’ve been doing these price prediction articles for a few years now and it has given me a unique opportunity to see the trend in pricing of R-134a over the years. Before I get into my prediction let’s take a quick look to see how the pricing has climbed over the years. Keep in mind that these prices are based off the standard 134a thirty pound cylinder and purchasing one at a time. The prices are obviously lower if you are purchasing a pallet or more.
As you can see folks the tariffs that went into effect this Spring had a huge impact on the price stability of 134a refrigerant. From 2015 to 2016 we had a little over a ten percent increase but then when we look at 2017 we see a huge fifty percent increase in end user pricing. That right there folks is that Chinese product being brought up to par with the rest of the market place. Sure, it sucks that we all end up having to pay more but the good side of this is that we now have American companies making money and a whole lot less of the Chinese product floating around here.
The good news here is that for 2018 I don’t see much of anything changing as far as price wise. The damage has already been done as you can see from the above numbers. Everyone is already feeling the impact of this new tariff but we are still too far away to feel the impact of 1234yf or the planned phase out of 134a. While there is speak of raw materials going up on 134a I don’t predict that an increase will last mainly due to the amount of competitors in the market today. So, for the 2018 marketplace on 134a I predict it to be rather stable and stay right around that $150.00 price that we can find on Amazon.com right now. Just remember that this $150 price is for individual cylinders. If you are buying in a pallet load you should be able to get twenty to thirty percent off of the basic cylinder price.
As we get closer to the 2020/2021 deadline things will begin to get interesting. I can’t wait to write this article again this time next year and to glance into the future of 2019 to see what will happen. Thanks for reading and if you haven’t already please take the time to subscribe to my mailing list in the top right corner of my pages.