Even today R-22 refrigerant is still one of the most demanded and used refrigerant on the market. Sure, over the years the HFC R-410A has slowly been eroding R-22’s market share but there are still thousands of old R-22 machines out there from 2010 or even earlier. These machines have already started breaking and with each passing season the chance of breakage cranks up higher and higher. As you all know when a leak occurs, especially a large one, the system will need more refrigerant. Customers have to weigh the cost to replace their R-22 or to get a brand a new R-410A unit. We all know the guy who will want to ‘save’ a thousand dollars today by patching their old R-22 unit and have it limp along for another year or two. Because there are those guys out there rather they be homeowners or small business owners the demand for R-22 will still be there even as we go into the year of 2018.
The question now though is what will the new 2018 year bring to the price of R-22? Will it remain flat? Will it go up? Or, will it crash? I highly doubt it will crash but let’s dive in and take a look at what’s going to happen to the R-22 market.
Like with any good analysis we have to look at the considerations and outside factors that will affect the price on R-22 before we can make an attempt at an accurate price prediction for next summer. Let’s take a look:
- The Phase Out – As all of you know R-22 was phased out in 2010 but what some of you may not know is that the scheduled phase out was set to be staggered occurring every five years until it’s completion in the year 2030. The initial 2010 phase out caused the price of R-22 to jump and jump. We went through another reduction in the year 2015. This caused the price of R-22 to climb even higher. As we approach 2018 we are now only two years away from the big change. In 2020 there will be NO importing or producing of R-22 allowed in the United States. The only source for R-22 refrigerant will be through reclamation. Think about that for a second. The only way you can get R-22 is by sourcing it from a reclaimer. Can you imagine what will happen to the cost of this stuff when the year 2020 comes?
- Companies Consolidating – I’ll touch this further on a much larger article but for now what I will say is that there are two companies out there who saw this 2020 deadline for R-22 imports as a godsend. These two companies, Hudson Technologies and A-Gas Americas, have been buying up all of the refrigerant reclaimers in the States in an effort to monopolize the market and the price of R-22 so that when the 2020 deadline comes they will control nearly all of the market and sale of R-22. In other words, they can raise their prices to whatever they want as long as the other company agrees. There won’t be room for any other competing reclaimers if there are any left by the time we get to 2020.
- On the flip side of the two points that I made it is worth noting that R-22 machines are dying. No new machines could be produced in 2010. So, that means that the youngest R-22 units out there are at least eight years old. (There are some companies who have been producing ‘dry’ R-22 units that ship to the contractor without any refrigerant to get around the clause, but these are the exceptions.) Customers and companies alike are debating back and forth on rather to repair their R-22 or to get a new R-410A machine. As the years pass the demand for R-22 will began to lessen as 410A gets a solid foothold on the market. The companies I mentioned above are gambling that the demand in 2020 for R-22 will still be high enough to to fill their reclamation supply. If it is not and 410A takes over the market then they may regret all of those reclaimer acquisitions they made.
- The last point I’ll make here isn’t really a point at all. In fact it’s a table of the R-22 phase out schedule. This will give you an idea of what has happened to R-22 and what will happen in the future.
|Year to Be Implemented||Implementation of HCFC Phaseout through Clean Air Act Regulations||Year to Be Implemented||Percent Reduction in HCFC Consumption and Production from Baseline|
|2003||No production or import of HCFC-141b||2004||35.0%|
|2010||No production or import of HCFC-142b and HCFC-22, except for use in equipment manufactured before January 1, 2010||2010||75.0%|
|2015||No production or import of any other HCFCs, except as refrigerants in equipment manufactured before January 1, 2020||2015||90.0%|
|2020||No production or import of HCFC-142b and HCFC-22||2020||99.5%|
|2030||No production or import of any HCFCs||2030||100.0%|
I’ve been doing this price prediction articles for a few years now and it has given me a unique opportunity to see the trend in pricing of R-22 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 R-22 thirty pound cylinder.
- 2015 – $300.00
- 2016 – $450.00
- 2017 – $500.00
That is a fifty percent increase from the year 2015 to 2016. Then from 2016 to 2017 we have about a ten percent increase. As you can see we had a rather big jump in price the moment the tighter phase out restriction hit in 2015. I would say that we will experience the same effect if not more in 2020. It could go upwards to $800-$900 a cylinder when 2020 hits.
As for what will happen in 2018 for R-22 pricing I would say that we are going to experience a year very similar to 2017. The price will go up, albeit it slightly. If I was to put a number to it I would refer to this year and call it a ten percent increase. So, if we’re looking at a price of around $500 expect to see a price next year of around $550-$575 for a thirty pound cylinder. Keep in mind that this is for individual cylinders. If you were to purchase a few at a time or even a pallet at a time you’ll be able save some money and maybe even get into the $400 range for a cylinder.
So there you have it folks. Next year’s predicted price for a thirty pound cylinder of R-22 is set at $550-$575. If you are looking to buy some I would suggest to buy it now before the price climbs any higher. However, if you are on the other side of the coin and you have some inventory that you are sitting on I would hold onto it and watch the value climb and climb. I’ve even heard of some people buying whole pallets a few years back and storing it away in their warehouse for a few years. Imagine the profit if you bought forty cylinders at $300 and then turned around and sold them at $900 a few years later once the 2020 phase out laws have been put in place.
$500* 40 = $20,000 cost (40 cylinders is a pallet of refrigerant.)
$900 * 40 = $36,000 cost. (40 cylinders is a pallet of refrigerant.)
Profit of: $16,000
Not too bad of a deal if you ask me! If you are interested in purchasing R-22 please visit our product page. Also, if you are interested in purchasing pallet quantities please visit our bulk purchasing page. Lastly, please be aware that you need to be certified with the EPA in order to purchase or handle R-22.
Thanks for reading,