Well folks, it seems that we’re having the opposite problem that we had last year. Around this time last year 410A was going for around two-hundred dollars a cylinder depending on who you were buying from. Many consumers and business owners alike were having sticker shock upon seeing the price on a cylinder of 410A. After all, 410A was supposed to be the ‘cheaper’ refrigerant when compared to R-22, right?
The large increase in price we saw last year was attributed to the shortage of the R-125 refrigerant. R-125 is one of the two refrigerants needed to make R-410A. The mineral Flurospar is a main ingredient when creating R-125 and unfortunately most of world’s Flurospar is mined in China. Just like how we used to be reliant on oil from the Middle East we are reliant on Flurospar from China. Towards the beginning of 2017 Flurospar saw a forty percent price increase and as a trickle down effect R-125 saw price increase of one-hundred and thirty percent. The cause of these price increase had to do with China enacting new environmental regulations on the Flurospar mining industry. These regulations caused a slow down which resulted in the price increase and the trickle down effect across the industry. All of these price increases were eventually passed down to contractors and consumers during last year’s summer.
This year we seem to be having the opposite problem, if you could call it a problem. I guess that depends on what side of the industry you are on. If you’re distributing refrigerant at a higher price point that means more margin for you, but if you’re a customer needing to pay for a repair you’re going to gladly take that lower refrigerant price. As I write this article you can buy a pallet of R-410A (Around 40-50 cylinders) for around seventy dollars per cylinder. Yes, seventy dollars. That is a HUGE decrease from last summer’s two-hundred dollar price. This price point is one of the lowest on R-410A that we’ve seen in years.
The European Union
While there were a couple surprises this year like the EPA’s SNAP Rule 20 being overturned I do not believe that the court’s ruling is what caused the price decrease. Instead, I believe these price decreases can be attributed to the European Union and their F-Gas Regulation. Most of you are aware of this already, but the EU is phasing down and in some cases phasing out HFCs entirely across all of their countries. The goal, like with most phase downs, is to slowly reduce the quantity allowed to be manufactured or imported into the European Union. While the start of these reductions began in 2015 the first real significant phase down was the beginning of this year, in 2018.
The first really big cut in HFC supply comes in 2018 – when there will be a cut of around 40%. It is likely that HFC refrigerant prices will rise sharply in 2017 / 2018 as there is potential for a significant refrigerant shortage. – Source: FDF.ORG.UK
Because of this phase down in the EU the prices over there have been rising and rising. If you thought the price of 410A or 404A was bad here last summer then you should check out how much it goes for in France! There has been a scrambled over there to retrofit existing applications away from the high GWP refrigerants and over to alternatives like R-32. This cut in 2018 of nearly forty percent was huge and it’s going to be cut again significantly in just a few years in 2021. The demand in the European Union shrunk overnight once January 1st, 2018 hit.
Here is my theory. The low price here in the United States can be directly contributed to a mass amount of imported product from overseas. (China, mostly.) Now, why has this extra 410A been flowing into the US? Well, it goes right back to the European Union. I believe that the refrigerant producers in China didn’t properly forecast the upcoming cut across the EU. Because of this they now have a surplus of inventory that they are trying to unload and like with any supply and demand scenario the price has dropped and dropped until we get to that seventy dollar a cylinder price we are now at today.
The good news though is that if you are a contractor or a business owner there isn’t going to be a much better time to buy then now. As I said earlier this seventy dollar price is very rare, especially in the past few years. It is a great time to buy as no one knows for sure how long this price is going to last. If you are interested in purchasing please reach out to us via our bulk purchasing page.