Here we go again. Yesterday the American Hydroflurocarbon Coalition filed a lawsuit with the United States Department of Commerce claiming that HFC refrigerants such as R-134a, R-410A, and R-404A are being imported from China at an unfair price.
This is big news as last year there was a similar lawsuit filed with the International Trade Commission by refrigerant manufacturer MexiChem that was specifically targeted on Chinese imports of R-134a. This law suit was filed at the end of 2013 and the Trade Commission ruled against MexiChem in November of 2014. The ITC said that the imported Chinese product was NOT giving American manufacturers and unfair advantage. You can read about their ruling by clicking this link. Needless to say MexiChem was not happy with their decision and appealed their ruling in January of 2015. We are still waiting to hear what the Trade Commission will say on this case.
Now, on top of the MexiChem lawsuit we have this lawsuit filed by the American Hydroflurocabon Coalition with the Department of Commerce. This is significant as the previous lawsuits were only specifically targeting R-134a. This present lawsuit that was filed yesterday June 25th, 2015 is not only targeting R-134a but also all other HFC refrigerants such as R-410A and R-404A.
MexiChem and the Hydroflurocarbon Coalition are filing this lawsuit due to the price point that Chinese product can be brought in to the country at. For example, if you were to buy a cylinder of R-134a from DuPont, HoneyWell, or MexiChem you would most likely pay about seventy-five a cylinder. Now, if you were import Chinese product you could most likely get a cylinder of 134a for about forty to fifty dollars a cylinder. (Given you need to import a trailerload of refrigerant, but at that price who wouldn’t?)
One of the arguments that MexiChem made last year was that the Chinese goverment was subsidizing their refrigeration industry. On top of them already having a low price point the Chinese goverment is throwing money at them and lowering the price even more. MexiChem and other refrigerant manufacturers just can’t compete… or so they say. In my opinion the only reason these manufacturers are pushing for these lawsuits is that they are greedy. They want the market back for themselves. (Over the past couple years imports on Chinese refrigerant have increased over sixty percent.)
Watch out for Pricing…
Last year when the lawsuit was announced there was a panic on R-134a. The price went from about seventy dollars for a thirty pound cylinder upwards to one-hundred and forty dollars a cylinder in just a few months. After about six months of speculation the price on 134a did eventually decline back to normal levels. My concern is what is going to happen to the pricing on the other HFC refrigerants now that this lawsuit has been filed? Is 410A going to skyrocket to one-hundred and fifty a cylinder?
The goal of these lawsuits is to raise levies or tariffs on the imported Chinese product. So, instead of the manufacturers getting more competitive and lowering their cost they are taking the route of government and trying to raise the cost of the Chinese product. If this lawsuit is successful then everyone in the country is looking at higher HFC refrigerant pricing. What is to stop the American manufacturers from raising their price to one-hundred a cylinder on everything? If there is no more Chinese competition I can definitely see pricing climbing and climbing fast.
Pay close attention to your price on refrigerants this year. This lawsuit is going to have a significant impact on your short term price and potentially on the long term of refrigerant pricing if they win the lawsuit. For all of us on the consumption side let’s hope not. Let’s hope the Chinese product keeps flowing in.