This time last year folks we were seeing the price for a thirty pound cylinder of R-22 hover around six-hundred dollars a cylinder. This price increase didn’t come to a surprise to a lot of people within the industry. We all knew that R-22 was being phased out and a price increase was inevitable. The only people who were shocked by this were the customers and end users!
The price climbed so high so fast that a lot of folks ended up buying up on R-22 just in case the price rose even further. It was an investment and a matter or protecting their profit margins. They figured if they could purchase at five or six-hundred dollars a cylinder before it climbed to seven or even eight-hundred dollars they would save themselves the extra cost and also allow themselves to make a bit more margin on their R-22 recharges. After all, if it was this bad in 2017, it could only get worse in 2018… right?
Wrong, unfortunately. Since late 2017 and all of 2018 the price of R-22 has come down and down. While this time last year we were at that six-hundred dollar price by the time the new year rolled around we were hovering between three-hundred and fifty to four-hundred dollars a cylinder. Initially, this price decrease wasn’t too concerning as we were in Winter and the price of refrigerant usually crashes during the cold season. Most people predicted that R-22 would ratchet back up in price as we headed closer towards Spring and Summer.
In fact, yet again, the opposite happened. Instead of seeing the price climb from the four-hundred price point we are now seeing prices hovering between three-hundred and three-hundred and twenty-five dollars per thirty pound cylinder. So, we are HALF the price on R-22 then what we saw this time last year. Those purchases that everyone made back in 2017 are looking pretty poor nowadays. Imagine trying to sell R-22 to a customer when you purchasing it back at the six-hundred dollar price. You’re either going to take a loss or take the criticism from your customer for gouging.
The question now on everyone’s mind is what is causing this decrease? Especially when R-22 is on the way out. Remember, there are only about eighteen months left before that looming 2020 deadline hits and no more imports or production on R-22 is allowed within the United States.
Alternatives
The main reason why R-22 pricing has begun to decrease this year is the large available options for R-22 alternatives. In the beginning back in 2010 when the R-22 phase down began there weren’t that many alternatives on the market. Now, over the years since the phase out occurred there are now numerous alternatives out there for R-22 machines. I won’t get into every one out there in this article but I will say that the R-22 market is hungry for low priced cheaper alternatives that require little retrofitting.
Now, most of these alternative refrigerants can be easily retrofitted to work in an existing R-22 machine. What that means is that your customers who want to hang onto their ‘dinosaur,’ R-22 units can get a cheaper refrigerant alternative for a small retrofit fee. Last year, when we were at that six-hundred dollar price per cylinder these alternatives looked pretty good. This year the alternatives have taken more of the market-share and the demand from existing R-22 units along with it. Because of this the demand for virgin R-22 has begun to shrink. Now, some of this shrink may just be due to older R-22 machines retiring and being replaced but another good portion of it is due to these alternative refrigerants.
Reclamation
Some people within the industry may say that reclamation industry on R-22 has caused a decrease in price this year, but I would have to take issue with that. For whatever reason, there is a stigma attached to reclaimed refrigerants. A lot of technicians and contractors just do not want to use them. They are seen as ‘dirty’ or unreliable. This attitude will need to be combated. I used to work in the auto industry and we saw the exact same mentality when it comes to remanufactured parts. Sure, the transmission is remanufactured, but I can assure you mister customer that it is still a quality product. Unfortunately, when it comes to reclaimed refrigerants I fear that we will have to sell each tech or contractor. A lot of times this can be done just by touring a reclaiming facility and seeing all of the processes and work that goes into cleaning a used refrigerant. This isn’t half-cocked product. It is done right and regulated by the Environmental Protection Agency.
While reclamation hasn’t caused a decrease in price on R-22 it is still a great source to get a bargain price on R-22. Most of the time you can get reclaimed refrigerants for ten to twenty percent lower then the standard price on an virgin R-22 cylinder. This may not mean much right now, but I can assure you folks that if the price rises again that ten percent may look pretty inviting.
Conclusion
What will the next eighteen months bring when it comes to R-22? As most of you know on January 1st, 2020 R-22 can no longer be imported or manufactured within the United States. That means that there are three solutions for a customer looking to repair their R-22 machine.
- Repair and recharge with virgin or reclaimed R-22
- Repair and retrofit an existing R-22 machine to accept an alternative R-22 product such as MO99.
- Replace the aging R-22 machine with a newer R-410A application.
What will this 2020 deadline do to R-22’s price? At this point folks it is very hard to tell or predict. We could see this three-hundred to four-hundred price last this year and throughout most of next year’s summer season. However, as we creep closer to Fall in 2019 I could see the price slowly starting to rise. When 2020 hits and the production is cut off we’re either going to have a panic that causes the price to sky-rocket back up to six-hundred or more dollars per cylinder or we’re going to see the price slowly creep up and level off around four or five-hundred dollars a cylinder. It is all a matter of how many people are using alternatives, reclaimed R-22, or who are just sick of their old unit and are replacing with a 410A model. Regardless of what happens remember that R-22 is dying and will soon be extinct. While the price may go high in 2020 it will not be sustainable as the demand for R-22 will decline with each passing year.