2018 R-410A Refrigerant Pricing Predictions

R-410A. It’s the refrigerant that everyone loves and adores, right? Well, maybe not this year. Upon researching for this article I saw so many articles, posts, and gripes about the price of R-410A over the spring and summer of 2017. In some cases depending on where and when you bought you could have seen the price double from one month to the other.

This right here is why I take the time to write these articles each and every year. It’s a lot of fun to dig into the information and figure out why. Why did this price increase happen? What can we do to avoid this? Will it happen again in 2018? Well ladies and gentlemen let’s dive in and take a look at the facts:

Considerations

Like with any good analysis we have to look at the considerations and outside factors that will affect the price on R-410A in 2018 before we can make an attempt at an accurate price prediction for next summer. Let’s take a look:

  • There was a worldwide shortage of R-125 during the summer of 2017. For those of you who do not know R-410A is a blended refrigerant comprising of R-32 and R-125. The majority of R-125 is sourced from China and something happened over the spring and summer of 2017 that caused the shortage that we all felt in our pocket books. I spent some time researching why this happened. The most common explanation that I found is that the chemical Flurospar experienced a forty percent price increase towards the beginning of 2017. (Flurospar is a main ingredient in the R-125 refrigerant.) This price increase caused a direct effect on the price of R-125 raising it by one-hundred and thirty percent. The price increase on Flurospar was blamed on China’s strengthening of environmental laws that directly affect the mining industry. So, because China wanted to become more environmentally conscious we all paid the price.
  • A lot of people already know about the tariffs on R-134a Chinese imports. This was put in place by the International Trade Commission in the spring of 2017. What a lot of people don’t know is that there are tariffs also on imported Chinese HFC refrigerant blends, such as R-410A. These tariffs can range from 101.82% to 216.37%. (These variances depend on cost of the product at the time of import.) These tariffs were put in place in the summer of 2016 so a lot of us have already seen the affect over 2017’s summer.
  • As I write this article there is not a defined or clear low Global Warming Potential alternative to R-410A. That doesn’t mean that companies and governments aren’t actively looking for an alternative but at this point in time there just isn’t a suitable fit. What that means folks is that R-410A is here to stay for the foreseeable future. That means market stability.
  • I said above that R-410A is here to stay but that doesn’t mean that it’s not in the cross-hairs. 410A has a high GWP and is so widely used that it is definitely having an pact on the environment. So, it won’t be in 2018 but give it time, maybe even just a few years, and we will begin to see the inevitable phase out of 410A to a new, most likely HFO, refrigerant. This leads me into my next point.
  • While the 410A residential application has been untouched by the EPA other applications haven’t. While we all know that the majority of 410A usage comes from residential the discontinuation of these other applications can and will have ramifications. Remember, this is the beginning of a phase out. The EPA’s SNAP Rule 20 source can be found by clicking here or you can read the below excerpt:
    • New vending machines as of Jan. 1, 2019;
    • New stand-alone medium-temperature units with a compressor capacity below 2,200 Btuh and not containing a flooded evaporator as of Jan. 1, 2019;
    • New stand-alone medium-temperature units with a compressor capacity equal to or greater than 2,200 Btuh and stand-alone medium-temperature units containing a flooded evaporator as of Jan. 1, 2020;
    • New stand-alone low-temperature units as of Jan. 1, 2020; and
    • New chiller applications as of Jan. 1, 2024.

Pricing Predictions

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-410A 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 410A twenty-five pound cylinder and purchasing one at a time. The prices are obviously lower if you are purchasing a pallet or more.

Now, obviously we can see that the price has died back down from what it was this summer. That’s a good thing, but it’s also winter. Let’s take a look at the past few years. From 2015-2016 we saw a ten percent increase in price. Nothing too major. The big change occurred from 2016-2017. There is a fifty percent increase in price here. This increase is in direct correlation to the time when the tariffs on Chinese imported 410A refrigerant were put into place. Those numbers just go to show you how much of an impact cheap Chinese imports were having on the marketplace.

Alright, so the big question on everyone’s mind is what will the pricing of 410A do in 2018? Well folks, I hate to say it but I think we’re going to have a repeat of 2017. Right now the price has leveled out more or less at around $150.00. This is due to the winter months and low demand. But, as the demand begins to pick up I fear that we will begin to see a shortage again on R-125. (A key ingredient to R-410A.) Fifty percent of the world’s global demand of R-125 comes from China and earlier this year they strengthened their environmental regulations on Flurospar mining. These new regulations are here to stay. So, what that means is that we could very well see another spike in pricing once the demand of a hot summer hits the United States again.

Here is my prediction. R-410A will stay level just as it is now at around $150.00 a cylinder. (Depending on where you buy you can go up or down about ten or twenty dollars.) If we have another shortage, which I think we will, I believe we could easily hit over $200.00 a cylinder. I do not think it will be as bad as it was in 2017 mainly because I hope that companies can learn from their mistakes and help fill the gaps when the 2018 season hits.

The last point I’ll mention here is that this pricing that I am putting forth is based on a one cylinder purchases. If you were to purchase 3, 5, or more cylinders at a time you will see a lower price. Just remember that when the summer hits and the demand skyrockets your price can as well.

Conclusion

The question a lot of you may be asking is how can I avoid this price gouging situation during next year’s summer? Well folks, the answer is pretty simple and it’s exactly what I used to do when I purchased R-134a. Buy in bulk and buy in the dead of winter. Prices aren’t going to go any lower then they are in December and January. It’s a simple supply and demand concept. Barely any one is buying at this time and the demand is all but stopped unless your are in Phoenix.

Distributors still have numbers to meet. Sure they have their curved budgets for the summer months but they will gladly take a large sale and will be more than willing to cut you a deal so that they can get the business. Yes, you will have to sit on your inventory for a bit but think about how comfortable you will be in the summer, and if the pricing does sky rocket again you can sit back and make a ton of profit off each pound you sell while your competitors are paying sky-high prices.

Sources

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