Over the past few weeks we have been writing RefrigerantHQ’s pricing prediction on various refrigerants for 2019. We have covered some of the most popular refrigerants out there including R-22, R-134a, and R-1234yf. Today’s prediction article will be focusing on R-410A Puron. Most everyone’s mind has been on R-22 and what’s going to happen next year with the 2020 phase out deadline. With all of this change it is easy to forget about Puron, but the 410A market share is only growing and it’s pricing impacts can have a substantial effect on contractors and consumers. After all, R-22 is on it’s last legs and it is not going to be around much longer. Sure there are other alternative refrigerants out there but like it or not R-410A is the king right now.
Looking back at my prediction on R-410A from last year I have to say that I was way off. I had predicted a 2018 summer price at around two-hundred dollars per twenty-five pound cylinder. While that may have sounded crazy, we should consider what we saw in the 2017. Last year there was a shortage in the chemical known as Flurospar. Flurospar is a key ingredient in fluorinated refrigerants like R-125. (R-410A is a fifty percent mixture of R-125 and R-32.) This shortage of Flurospar created a rippled effect on the supply chain and caused the price of 410A to skyrocket over the summer season and into the fall and of 2017. Last year’s prediction was based off of that pricing trend. I assumed that the shortage would continue. That is where I came up with my two-hundred dollars a cylinder number.
What actually happened was quite different. In the early months of 2018 the price per cylinder was around ninety dollars per twenty-five pound cylinder. It had come down quite a bit from the previous summer’s price. What was surprising though was that the price kept on going down even as we got into the hotter months. Usually as the summer months come we see a slight or large increase in refrigerant pricing due to the increased demand. This year however we saw the opposite. The price for a R-410A cylinder dropped by near twenty-five dollars. It went from around ninety dollars to sixty-five. That is nearly a thirty percent dip in price. One of our distribution contacts stated that R-410A was more volatile then R-134a this year. That is quite the change as R-134a is usually all over the place.
The question now though folks is what will the pricing do next year? Will R-410A keep going lower? Will it stay put? Or, will we see it climb back to the higher priced levels that most of are used to?
Considerations
I love doing analysis. It is what I do at my day job and it is why I write these kinds of articles. It can be fun to dig into the details and all of the factors that can affect pricing. When doing a pricing analysis like this I like to first provide the reader what considerations that I took and reviewed to come up with my pricing prediction. These help the reader understand my point of view and where I am coming from. Let’s take a look at some of them now:
Flurospar Shortage
I mentioned this earlier in our previous section. If we travel back about eighteen months ago this was a HUGE deal. The majority of the world’s Flurospar comes with mines in China. During the spring and summer of 2017 there were governmental regulation changes that affected the efficiency and overall output of the mines. This lower output is what accounted for the world’s shortage. In my previous analysis I assumed this shortage would carry into 2018, but I was incorrect. Will we see a shortage though in 2019? It is impossible to say. The only thing I can point to is the overall stability of the Flurospar market over the past year.
Chinese Refrigerant Imports
Back in 2016 there was an anti-dumping tariff instigated against Chinese HFC refrigerant blends. Included in this tariff was R-410A. I won’t get into all of the details here, but essentially there was a tariff put on R-410A. (For more information on the tariff click here to be taken to TheCoolingPost.) Here’s the thing though folks, this tariff was installed on ONLY the R-410A blended refrigerant and NOT the components of the blend. In other words R-410A was taxed but R-125 and R-32 was not. Doesn’t make much sense if you ask me.
Refrigerant distributors took advantage of this loophole and began importing mass quantities of R-125 and R-32. Once imported they would then blend the refrigerants in their own facility. The dumping of cheap HFC refrigerants continued. This mass import of Chinese product has attributed to the much lower cost of R-410A that we are seeing today.
Trump & His Tariffs
Most of the country has felt the effects of the various tariffs that the Trump Administration has issued over the past year. This could either be through your employer or just paying for basic things. In my day job I had to travel to Belgium a few months back to work with our corporate office. The reason for the trip? Trump’s Tariffs and how to enact them throughout the company. Whatever your politics are, we can definitely say that these tariffs have had an impact. Refrigerant, for the most part, has been left unscathed on these tariffs. With all of these imports coming from China though, how long is it before a tariff is enacted? What if one is enforced on R-125? How will that effect the marketplace? Inevitably it will lead to higher prices, but how much?
R-410A & Reclamation
With the end of R-22 coming in just about fourteen months the industry will be relying more and more on refrigerant reclaimers. These reclamation facilities can process this used R-22 refrigerant, clean it, and then issue it back out into the world for reuse. This is the ONLY way for ‘new’ R-22 to be found after that January 1st, 2020 deadline. Remember, once the stockpiles of R-22 run out reclamation is all that is left.
Why am I talking about R-22? Well reclamation for R-22 is key for having a stable supply. With R-410A it is quite different. Reclaiming R-410A refrigerant, at least at this time, is not feasible. There is no profit in it. I was discussing this very matter with Chad Schnuelle of Refrigerant Inc just today. He stated that:
It is too cheap to sell reclaimed R-410A in the market and make a decent margin because of the fractionating factors. It’s a two component refrigerant blend of R32 and R125 with a 50/50 mix ratio. If there is a leak in a system one component bleeds off faster than the other. This means we have to add that component back in to get the 50/50 blend once we reclaim it.
So a reclaimed R-410A refrigerant actually has new refrigerant in it. This adds an extra layer of cost. Having that extra cost and then trying to compete with virgin R-410A at the rock bottom prices it is right now is nearly impossible. If the price of R-410A begins to rise, or if we get new tariffs instated like we mentioned above then the possibility of more reclaimed on R-410A market is there, but for now it remains out of reach.
Prediction
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. The prices are obviously lower if you are purchasing larger quantities.
- 2015 – $90.00 – Source
- 2016 – $100.00 – Source
- 2017 – $150.00 – Source
- 2018 – $90.00 (Winter)
- 2018 – $65.00 (Summer/Fall)
- 2018 – $80-$90 (Retail on E-Bay.)
Looking at the above numbers we can really begin to see the deep dive in pricing that occurred this year. There was a time where a price between ninety to one-hundred dollars was pretty standard no matter what season it was. Now with today’s dirt cheap price of around sixty-five dollars a cylinder it is tough to say what will happen next. In an effort to help myself with this prediction I reached out to a few refrigerant distributors before writing this article. I wanted to know what they thought of the market this year and what they thought next year would bring. Each of them said more or less the same thing. Prices will be low, but stable. In other words folks, this sixty-five dollars price per twenty-five pound cylinder is here to stay at least for 2019.
That’s right, our thoughts for 2019 R-410A pricing is the exact same price it is today. Last year I high balled it and got burnt so this year I am going to play it safe and take the advice of our distributors. Our official prediction is that the price will hover between sixty-five dollars to seventy-five dollars a cylinder. There will be some moving back and forth due to seasonality and all of that but for the most part the price will be stable. At this time the only wildcard that I know of is if Trump adds a tariff on R-410A or one of it’s components. If this happens then the pricing point is anyone’s guess.
Conclusion
I want to close this article by stating that this was a prediction and it is just that, a guess. No one knows for sure what will happen to the R-410A market next year and if they say they do then they’re lying. It’s a complete guessing game. I can only provide my analysis on the matter and go from there. Lastly, I want to mention that this is one man’s analysis on the market. We here at RefrigerantHQ are not liable for any business losses or gains when it comes to buying and selling R-410A.