Well folks I’m back and doing another prediction on R-134a pricing for this upcoming season. Over the past few months I have written a few articles on this topic. The first, which can be found here, stated that the R-134a price would stay relatively stable through the winter and into the spring and summer seasons. My thinking here was that the anti-dumping duties on Chinese R-134a had already happened and the market had already adapted. On top of that the European Union ended R-134a usage in new vehicles in 2017. So, with the lessened demand from the EU and the tariffs starting to settle into the market I thought we would remain relatively stable.
A few weeks later I wrote another article stating that R-134a pricing would be going up. Again, this article can be found by clicking here. The motivation for this article was that I had received two tips from some of my readers. The first was from a prominent manufacturer of R-134a stating that everyone’s price was going up seventy-five cents per pound. The next tip was from another manufacturer stating that pricing was going up one dollar per pound. Seeing both of these letters sent at right about the same time sent alarm bells off in my head and I wrote this article to alert everyone else.
Well now folks that the dust has began to settle I feel I can grant yet another prediction on R-134a for this year’s season. I haven’t seen much at all in price increases over the past few months. While initially I was a bit panicked by the pricing letters I soon began to realize that a lot of companies had plenty of stock on hand left over from the previous seasons. These price increases are on new product and there is so much older product in the market place that we haven’t seen much of an impact yet.
HFC Sales Restriction in 2018
Most of you know by now that R-134a and other HFC refrigerants are now subject to the Environmental Protection Agency purchase restrictions. These HFC refrigerants were added in January 1st of 2018. While we all knew this was coming there were some side effects that I had not foreseen. A lot of larger retail outlets out there like Sam’s Club, Costco, Wal-Mart, etc used to sell R-134a thirty pound cylinders to do-it-yourselfers. This was perfectly fine. There were no regulations and it was more or less treated like buying a new cylinder of propane at your local store. Well when this new regulation went into effect these companies decided to back out of the 134a market as they saw it wasn’t worth the time to check and record everyone’s 609 certification just to purchase a cylinder of refrigerant.
Here’s the thing though. These companies suppliers had stock piles of R-134a ready to be sold for the next season. With the cancellation of these purchases these suppliers were now stuck with a surplus of 134a inventory on hand. Think about it. If you had sixty percent of your sales coming from one customer and then that customer stopped buying you would be stuck with a ton of inventory. These vendors aren’t just going to let their inventory sit. No, they are going to find new customers and come in at a lower price than their competitors.
What that means is that there will be a lot more competition on the market place this season. With more competition means a lower price to the end user dealerships and repair shops across the country. While I don’t expect it to go down significantly I could see the standard thirty pound cylinder going down a few dollars all the way up to five dollars a cylinder when the season begins to pick up.
Here’s the caveat though. If everyone’s stock pile begins to run out halfway through the summer season then we could begin to see the opposite effect. We could begin to see the price starting to climb and climb. Remember, we have those price increases from the refrigerant manufacturers. So, when our distributors do run out of product they may end up buying at a much higher price.
That being said, I am skeptical that we will run out of 134a this season. There are so many factors going into decreased demand of R-134a this year. Just a few of them are:
- The European Union phase out in 2017 that we mentioned above.
- The HFC purchase regulation. No more do-it-yourselfers can purchase thirty pound cylinders. (They can still purchase cans.)
- More and more new vehicles here in the United States and other countries are now using the new HFO 1234yf refrigerant in place of R-134a. While the market is still small it is important to realize that with each passing year the 1234yf market share goes up and up.
Even with this decreased demand I believe the stock and surplus inventory is still at previous year levels. So, again, I think that we are going to see the R-134a price drop a few dollars, maybe even up to five dollars a cylinder. Let’s see how the season plays out. Best of luck to all of you!