Regardless of your politics last month’s election was definitely a surprise. Obviously, the election of Donald Trump will have a profound impact on the country and the rest of the world. The question I ask to you is what kind of impact will he have on the United States’ refrigerant market?
Now, we all know what kind of affect Barack Obama had on the market. While he didn’t preside over the phase out of HCFCs like R-22 he did preside over the beginning stages of phasing out HFC refrigerants such as R-134a, R-404A, and R-410A. All of his actions were in response to his Climate Change Action Plan. (This link to whitehouse.gov will show more detail.) Obama used the Environmental Protection Agency to impose new regulations on HFCs and to eventually phase them out entirely. His goal was to replace all of these refrigerants with the less potent, but more flammable, HFO refrigerants such as 1234YF. On top of that he also pressured other countries to do the same. (India, China, Pakistan, and others.)
R-404A is the first to go away and the process has already begun. In 2015 the EPA listed R-404A as unacceptable in newly manufactured machines as of 2017. This covers all supermarket refrigerators and freezers. Vending machines get a bit more of a break and have a deadline of 2019. I wrote an article about this at the time of the release and it can be found by clicking here. Next on Obama’s list was R-134a. The EPA has listed 134a as unacceptable in new vehicles as of the year 2020. (2021 model years.) The goal here is to switch everyone over to 1234YF or to other natural refrigerants.
So we know what Obama did and wanted to do the question is what do we predict Trump doing over the next four years? While I am not a fortune teller I believe the answer can be drilled down to two main points:
Tariffs on Imports
Before President Trump was even a pipe dream there were already anti-dumping law suits filed against Chinese companies importing their R-134a refrigerant in mass. The complaint was that the Chinese companies were being subsidized by the Chinese government which caused their price to lower to unheard of levels. Since this cheaper import was being flooded into the United States market it caused the US refrigerant manufacturers to drop their price as well. While this may sound good for the consumer it was actively hurting the manufacturers such as Honeywell, DuPont/Chemours, and Mexichem. Along with hurting US companies it also allowed for impure 134a product from China to enter the market. (Not all of the Chinese product was one-hundred percent 134a.)
The three companies I just mentioned joined together in a group called the American HFC Coalition. The coalition filed a suit with the US government’s International Trade Commission. The Trade Commission took over a year to decide and so far nothing official has happened but the signs are all pointing to an imposed tariff on the imported 134a.
The commission is due to hold another hearing on February 23rd, 2017 on it’s decision. (Link about it can be found here.) The rumor is that there will be around a two-hundred percent tariff imposed on new product. This tariff may in fact even be retroactive on previous imports. So, if you imported 134a in the past you may be at risk of having to pay the tariff or fine on your old product. This has many small business owners very nervous.
Throughout the campaign Donald Trump has stated again and again that he is against China. In his words they have been doing a trade war with the United States and they have been winning. He has also said that he is in favor of large tariffs on companies that move jobs overseas. It only seems logical that he would be in favor of anti-dumping tariffs on Chinese imported refrigerant.
I foresee that when he becomes President that he will push this even more than it already is. Chemours and Honeywell will grab his ear and he will push his Trade Commission hard and fast to approve the tariffs. If this does get approved the price on a cylinder of R-134a could reach upwards to $150-$200 a cylinder perhaps even higher than that.
Climate Change Skepticism
Well that first part was the bad news. Are you ready for the good news now? Donald Trump has stated again and again that he believes Climate Change to be a hoax. Believe it or not, this is good for the price of refrigerants. On top of his stance on climate change he has also stated that he will be getting rid of regulations across the board. Combining these two stances I could see Trump reversing course on the EPA’s decision to phase out 404A and 134a.
The whole reason they are being phased out is due to their Global Warming Potential and how they contribute to Global Warming. If Trump doesn’t believe in Global Warming in the first place why would he instill these hardships on businesses across the country? It just doesn’t make sense.
I don’t see this being a top priority for Trump right away but I feel as time goes on into his term and his consultants bring this to his attention that he will make the move to stop the HFC phase out before the deadline hits.
Having Trump is a mixed bag for the refrigerant industry. On one hand you get the Climate Change skepticism and the most likely remaining of HFC refrigerants. On the other hand though you have his hatred of China and their trade war. Over the next few years I predict we’ll see:
Tariffs installed not only on 134a but on other refrigerants as well. (410A and maybe even 1234YF.) These tariffs will force companies to make their product here in the US.
Reduction or total cancellation of HFC phase outs. (Including 404A, 134a, and 410A.)
Refrigerant Pricing Predictions - What will the year bring?
2015 Refrigerant Price Per Pound Predictions
I did a post on 2015 refrigerant predictions last November and figured I would do another post predicting this summer’s pricing as well as the fall and even into 2016. After all, it’s been six months since my last prediction post and a lot has changed. So, what is the price per pound on refrigerant for 2015? What changes are coming? What should you look out for?
The one thing to remember is that refrigerants are a commodity and pricing can jump or dive in a day’s time. The best analogy that I can make is that it is similar to the price of oil. Some days it’s at eighty dollars a barrel and other days it’s at fifty a barrel.
You never really know what’s going to happen… but you can predict using knowledge of the industry and what has been happening in the market. Or, you can just pull out your crystal ball!
Let’s start with the most complicated one, R-134a. R-134a is pretty much the standard refrigerant on any automobile application including cars, buses, trucks, and everything else. Over the past couple years the price on R-134a has maintained around $65-$80 a jug when buying a pallet at a time. (A pallet is forty jugs.) This price has really been the standard since I’ve been in the industry which is about eight years.
Last year in early 2014 things changed. In late 2013 a company called MexiChem filed a lawsuit at the International Trade Commission. (MexiChem is one of the largest refrigerant manufacturers in the United States. Honeywell and DuPont being the others.) MexiChem’s lawsuit stated that the Chinese product being imported into the United States was being brought in at such a low price that it was making MexiChem and other North American manufacturers not competitive in the market place.
To give an example, today you could buy a container of R-134a refrigerant from China for about $45-$50 a jug. Considering that most American made product is being bought for $65-80 a jug that leaves quite a difference in price. The distributors of this Chinese product could sell at $60 a jug and take all of the North American manufacturers’ business with ease.
Supposedly, the Chinese goverment was also subsidizing the refrigerant before it came into the United States. So, if the actual cost to manufacture the refrigerant was $35 the Chinese government would give subsides to the Chinese manufacturer and lower their price another $5.00 per jug. Not only are we dealing with imported product but now we are dealing with goverment funded imports. I can see why MexiChem was complaining.
The proposed fix in MexiChem’s lawsuit was to have the International Trade Commission levy heavy tariffs on the imported R-134a product. As I said previously the lawsuit was filed in late 2013 and was reviewed at the end of the first quarter in 2014. This is where things got interesting. It looked like the Trade Commission was going to sign with MexiChem and issue the tariffs. This sent a panic throughout the industry and caused the price of R-134a to skyrocket in week. I remember the week well. We were buying at around $70 a jug and then all of a sudden it jumped to $110 a jug. THEN it jumped to $145 a jug… and stayed there.
The price jumped as people realized that if these tariffs were issued what was to stop the big three refrigerant manufacturers from raising their cost even higher across the market? If the tariffs put the Chinese product at $90 a cylinder why not raise the American product to $90 a cylinder and make a bunch more profit? A lot of people panicked and bought up as much product as they could before the price raised even higher which in turn caused the price to keep climbing. The price stayed above $100 pretty much all summer, but it did start to steadily decline and eventually fall below $100 again towards the end of fall.
In November, 2014 the Trade Commission came to a ruling on the lawsuit. They ruled against MexiChem stating that the Chinese product was not harming the United States refrigeration industry. I wrote an article about this back in November and it can be found by clicking here. Needless to say, MexiChem wasn’t happy. They thought it over for a few months and in January of 2015 they appealed the Trade Commission’s ruling hoping for a different outcome in 2015. The Trade Commission’s next ruling is predicted towards the end of 2015 or early 2016. It is anyone’s guess as to what they will decide.
HFC Phase Outs
On top of the pending lawsuit on R-134a there is also the inevitable phase out of 134a to consider. R-134a is an HFC class refrigerant and is widely believed to be the next big phase out in the United States. It was already phased out in the European Union and is being pushed for phase out in the US already by the Obama Administration. Unlike it’s CFC/HCFC cousins 134a is not being phased out due to it’s Chlorine content, instead it is being phased out due to it’s high Global Warming Potential (GWP). R-134a has a GWP of 1,300 and it’s new alternative refrigerant 1234YF has a GWP of 4. The concern here is not the O-Zone but of Global Warming. Every time 134a is released into the atmosphere it contributes to GreenHouse Gases and Global Warming.
Europe is always ahead of the game when it comes to climate regulations and phased out 134a a few years ago and replaced it with the new HFO-1234YF refrigerant. Here in America 134a is still widely used for most automobiles but 1234YF is gaining traction on newer vehicle models such as General Motors. It is only a matter of time before 134a slowly goes away and is replaced with the new 1234YF.
Oh, and did I mention that there is an amendment to the Montreal Protocol that is being pushed by the North American countries, the European Union, China, and India to phase out ALL HFC refrigerants? Yes, I said all. That means 404A, 410A, and 134a. Nothing has been finalized yet, but it is expected to pass during this winter’s climate summit in Dubai.
With all of the above information on 134a it is surprising to see that the price per jug in 2015 has actually fallen back down to the $65-$80 range again. The price slowly began to fall over the 2014/2015 winter months and now with this cold spring that we are having it is still maintaining right around the ‘usual’ price. For the rest of 2015 I would predict the price to stay relatively flat. My reasoning is as follows:
The Trade Commission will not be ruling on MexiChem’s lawsuit until the end of the year. I do not foresee this affecting pricing until 2016 if it affects it all.
The HFC phaseout meeting will occur at the end of the year as well, but even if this passes it is still a twenty to thirty year timeline. It will not happen overnight and I do not feel like there will be a panic if this passes.
Lastly, it’s been a cold spring where I’m at in the MidWest. I don’t know about your side of the country but it’s been a nice wet spring so the demand for HVAC hasn’t hit yet. Who knows what summer will bring though.
In conclusion I predict we’ll stay right around the $65-$80 per cylinder for the remainder of 2015. Although, 2016 is completely wide open as all of these open issues will come to fruition.
R-410A is slowly becoming the standard refrigerant for home and commercial buildings. If you own an air conditioning unit from the year 2010 or greater chances are it is taking R-410a as it’s refrigerant. I actually just had a new unit installed for my home and I have to say it is SOOO much more efficient than the old R-22 unit. My monthly bills were cut by about thirty percent!
On to the pricing. I’ve been watching R-410a for the past couple years and it’s price really hasn’t changed much at all. It’s been hovering at around $60-$70 per cylinder when purchasing a pallet. Back in 2013 I sold 410A over Amazon for a few months and my price hardly every changed. 410A is still ‘new’ to the industry and is not being widely used at the moment. All of the older AC units are using the CFC R-22. But, as time goes on and the years pass R-410A will become more mainstream through out the country and I would predict price to go up over the years.
That being said I do have to mention that 410A is an HFC refrigerant, just like 134a. You know what that means. It is being proposed to be phased out at this year’s climate summit. Many many countries are pushing for all HFC’s to be phased out and this is another one that falls into that category. The problem is with 410A there is not a mainstream alternative, yet. There are some companies experimenting with varying types of refrigerant such as the new HFO refrigerants, Carbon Dioxide, or even Propane. So far nothing has come out on top yet.
For 2015 I don’t see much at all changing on R-410A. As I said before it’s still a fairly new refrigerant and when the phase outs of HFCs do come I predict 410A to be the last of the HFCs to go. With 134a there is already an alternative HFO refrigerant and with 404A there is already an alternative HFO refrigerant. With 410A there really isn’t one… yet.
In conclusion I predict 410A to stay steady at the $60-$70 per cylinder range.
R-404A isn’t as big as 134a, R-22, or 410A but it definitely has it’s purpose. Ever been in a supermarket? Of course you have. All those grocery store freezers, those ice machines, vending machines, and even transport refrigeration all use 404A. So, you as a homeowner may not have a need for 404A but it is definitely everywhere you go.
As far as future and pricing R-404A is pretty much the same as 410A. There aren’t any active lawsuits on it, there aren’t any BIG changes coming, and it is an HFC refrigerant so it is expected to be phased out over the next few years. It’s just about the same price as 410A as well. 404A hovers around $75-$85 a cylinder when buying a pallet and not much higher when just buying one jug at a time. (Amazon and E-Bay are at about $90-$95 a cylinder at a time.)
The one thing to note with 404A is that there is now an alternative HFO refrigerant known as R-452A. But, it’s not ‘THE’ alternative. It’s a poor man’s alternative. R-404A has a Global Warming Potential of 3,943. The new R-452A has a GWP of 2,140. As you can see it’s quite the reduction in GWP but compared to the 134a alternative, 1234YF, it is nowhere near good enough. 1234YF has a GWP of 4 and 452A is still way up over 2,000.
Regardless of that, ThermoKing and Carrier have begun building their new refrigerated trucks using R-452A rather than 404A. Not only that, but Coca Cola has begun switching it’s vending machines away from 404A over to Carbon Dioxide refrigerants, or R-744. Companies are leaving 404A behind in droves and it’s only going to increase as time goes on.
I actually predict the price of 404A to go down as we go through the summer and fall of 2015. Nothing crazy here, maybe five dollars a cylinder. It just seems that with all of these companies switching away from 404A that the demand is going to crash and the price is going to go down. Just be ready for the phase out of 404A in the next few years as we may see prices rise again.
In conclusion I predict 404A to go down about $5.00 a cylinder in the 2015 summer and fall. Price would be around $65-$75 a cylinder for one pallet.
R-22 was the end all be all of refrigerant for fifty years. It was THE refrigerant used in home and commercial buildings. It was also one of the first types of refrigerants to be phased out via the Montreal Protocol. The phase out of R-22 was due to the Chlorine that it contained in it’s chemical composition. Chlorine when released in the atmosphere damages the O-Zone layer and it was found in the 1980s that the constant use of R-12 and R-22 had caused a hole to form in the O-Zone. Numerous countries banded together and formed the Montreal Protocol to ban O-Zone depleting substances such as R-22.
In 2010 the ban of R-22 began. The first step was that NO new machines manufactured or imported in the United States could take R-22. The new machines had to take an alternative O-Zone friendly refrigerant. The default replacement that was chosen was R-410A. When the 2010 phase out hit the price of R-22 climbed substantially and has held steady at about $290-$300 a cylinder for a pallet. Even quite a bit higher when buying a single jug at about $380-$400 a cylinder.
In 2015 there was another step in the phase out of R-22. This step involved the United States to cut ninety percent of it’s consumption and imports of R-22. In November of 2014 I predicted that the new 2015 reduction would cause the prices of R-22 to go even higher, but surprisingly that did not happen. At least not yet.
The Montreal Protocol required the U.S. to reduce its consumption of HCFCs by 35% below the U.S. baseline cap. As of January 1, 2003, EPA banned production and import of HCFC-141b, the most ozone-destructive HCFC. This action allowed the United States to meet its obligations under the Montreal Protocol. EPA was able to issue 100% of company baseline allowances for production and import of HCFC-22 and HCFC-142b.
January 1, 2010:
The Montreal Protocol requires the U.S. to reduce its consumption of HCFCs by 75% below the U.S. baseline. Allowance holders may only produce or import HCFC-22 to service existing equipment. Virgin R-22 may not be used in new equipment. As a result, heating, ventilation and air-conditioning (HVAC) system manufacturers may not produce new air conditioners and heat pumps containing R-22.
January 1, 2015:
The Montreal Protocol requires the U.S. to reduce its consumption of HCFCs by 90% below the U.S. baseline.
January 1, 2020:
The Montreal Protocol requires the U.S. to reduce its consumption of HCFCs by 99.5% below the U.S. baseline. Refrigerant that has been recovered and recycled/reclaimed will be allowed beyond 2020 to service existing systems, but chemical manufacturers will no longer be able to produce R-22 to service existing air conditioners and heat pumps.
R-22 is going away, rather you like it or not. Every year it gets more expensive. I wrongly predicted that the price would go up to around $500 a jug in 2015 due to the reduction in supply but that is not to say that the price won’t still go up. After all, the inventory is shrinking and there is still a large amount of R-22 units running in the United States. There will be a demand even with this reduction in production.
In conclusion I predict R-22’s price to rise, but not substantially over 2015. At the end of 2015 I can see R-22 being bought at about $330-$350 a cylinder for pallet and about $420-$430 for individual cylinders.
1234YF is the new HFO replacement for R-134a automobile applications. It is seeing widespread usage in Europe but it is still very rare to see in the United States. There are a few manufacturers using it today on their new models of cars but you will begin to see 1234YF units more and more over 2015 and in future years. Remember, 134a is going away and 1234YF is the recommended replacement. The only other viable alternative at this time is Carbon Dioxide units, but these are still being experimented with at this time.
Here’s the downside. The price of 1234YF is VERY high. Now, I’m not sure why the price is so high. My guess would be either the supply is extremely low at this time, or the manufacturing process is a lot more complicated compared to it’s HFC counterparts. Today the price on a ten pound jug of 1234YF is sitting around $700 a jug. (I don’t even know anybody buying pallets of this stuff yet.) The hope is that this price will begin decline over the years as it becomes more mainstream through the United States.
1234YF is still fairly new to the US market and is seeing a very high introductory price. I do not see this price changing much, if at all, in 2015. My prediction is that it will stay right at $700 a jug give or take $20 higher or lower.
If you are interested in purchasing 1234YF refrigerant then I would highly recommend visiting Refrigerant Depot out of Orlando, Florida by visiting this link.They are an official Honeywell Refrigerants distributor and will provide the product right to your door.
Just remember that refrigerants are a commodity and the pricing changes daily. A few tips before I leave on buying refrigerant:
If you can, buy product in the dead of winter. Prices are cheap and vendors want to unload their excess product. You can usually get quite a deal.
Watch the market and look for incoming phase outs. You never know when the price will skyrocket.
Don’t be afraid to sit on refrigerant inventory. It doesn’t go bad and you may end up saving yourself a fortune.
DuPont Refrigerant Splits into New Chemours Company
DuPont refrigerants is no more. Let that sink in for a second. OK, ready? Instead of DuPont Refrigerant you now have Chemours Refrigerant.
In 2013 DuPont announced that they would be separating their refrigerant division into a completely new company called ‘The Chemours Company.’ This new company would be completely independent and separate from DuPont. In the official announcement in 2013 the completion date was estimated around first or second quarter 2015 and so far they have lived up to their goals. A timeline of Chemours’ history and their official website can be found by clicking here.
Even though Chemours is a new company and could jokingly be called a ‘start-up,’ it is nowhere near a start up. They will be starting their first year with guaranteed seven billion in sales, with a presence in over one-hundred and thirty countries, as well as having all of the former DuPont management at the reigns. Also, did I mention that this stat up has nine thousand employees already? Now if only my start up could get this kind of traction!
I was reading through their Frequently Asked Question section earlier today and it seemed pretty standard to be honest. If you’re interested the FAQs can be found by clicking here. The one thing to mention is that Chemours will not just be dealing with the refrigerant side of DuPont’s business but also with Titanium Technologies and Chemical Solutions. It’s pretty much all of their chemical divisions being merged into one separate company.
DuPont has a long history of splitting into various companies. For example, were you aware that Pierre DuPont helped fund General Motors in their beginning and was eventually the chairman of GM? DuPont and GM actually partnered together to come up with the first trademarked Refrigerant. DuPont led General Motors for nearly forty years but they were eventually forced to give up ownership of GM due to goverment anti-trust laws.
DuPont was also split up by the goverment in the early 1900s for their monopoly in the explosives industry after they purchased numerous smaller explosive companies over the course of a few years. Did I mention in the 1980s that DuPont purchased all of Conoco as well? At least with Conoco they weren’t forced to sell by the goverment. They sold their Conoco ownership in 1999 to another petroleum company.
Now, I can only guess as to why DuPont decided to split up their refrigerant and chemical division but given their track record of holding monopolies and eventually being split up maybe they just jumped the gun before the government intervened. Besides Honeywell what other major refrigerant manufacturers are there out there? You could count Mexichem here in the United States and there are a few here and there across the world but the two powerhouses are HoneyWell and now Chemours. Not many others can compete with their price and quality.
In essence this new Chemours company isn’t really going to change much within the industry. It’s the same people running it from DuPont, the same plants and manufacturers as DuPont, and you’re getting the same great quality that DuPont provided in years past.
The ONLY thing that I can predict changing over the next few months and years is that the DuPont name will eventually be phased out and you will begin to see the new Chemours name take place on all of their cylinders and tanks you purchase from them.
Even though nothing is really changing saying goodbye to DuPont refrigerants seems like the end of an era.
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