R-22 and the Close of Summer

At the beginning of this year many folks thought that the price of R-22 would rise and rise. Some were predicting prices at five-hundred or even six-hundred dollars for a thirty pound cylinder. After all, this was the last true summer for R-22. At the end of this year on January 1st, 2020 the Environmental Protection Agency’s phase out of R-22 will be complete.

After that date imports or production of the HCFC R-22 refrigerant will be banned. The only way for a contractor to get a hold of R-22 will be through the backlog of product that refrigerant distributors are sitting on or through an EPA certified refrigerant reclaimer.

This phaseout has been ten years in the making and over those years the price of R-22 was expected to rise. In 2010 there was a restriction imposed on imports and production. In 2015 that restriction was ratcheted up. In each of these occurrences the price of R-22 climbed.

It reached it’s highest point during the summer of 2017. At one point it hit seven-hundred dollars for a thirty pound cylinder. In most cases though it averaged around six-hundred dollars a cylinder. There was a time where folks thought this was the new normal. That this six-hundred dollar price would be the baseline and that it would only go up from here as the 2020 date slowly approached.

Instead, the opposite occurred. It was towards the end of 2017 that the price began to fall. The price decline seemed like the typical winter price drop but as we moved into 2018 the price decline continued. There was some bounce back here and there but the overall trend was decline.

Why though? Why was the price dropping? There were two primary drivers. The first was the amount of product that was sitting on hand. Many refrigerant distributors had begun buying R-22 in larger quantities in anticipation of the price going even higher. Once the market adjusted to the higher price these distributors would then sell at just below market value and make a ton of profit. Or, so they hoped.

This extra inventory flooded the market and caused the prices to drop. As the prices dropped the distributors who were holding onto their product began to unload theirs as with each price drop they were losing more and more money. It was a snowball effect that led to the price falling downwards.

The other part of the equation was the R-22 alternatives and the R-22 reclaimers. During the ten years of the R-22 phase out it seemed like everyone was coming out with their own R-22 alternative refrigerant. There are dozens and dozens of them out there. Each one is it’s own unique refrigerant with it’s own unique requirements. Some of these alternatives required very little retrofitting as well. A contractor could buy an alternative refrigerant and do the retrofit on the customer’s unit all for under the cost of recharging their system with genuine R-22.

When R-22 hit that peak price point of six-hundred dollars a cylinder the alternative market began to grow. Along with the alternatives came the certified reclaimers. Throughout my research and talks with those within the industry the supposed ‘sweet spot’ for alternatives and reclamation is about four-hundred to five-hundred dollars a cylinder. If R-22 falls below that four-hundred dollar price then alternatives/reclaimed product doesn’t make sense. After all, why buy a knock-off version if you can get the real thing for the same price?

Today

So, here we are folks. It’s the middle of September of 2019 and the summer has passed us by. If there was going to be a price increase on R-22 it would have been this summer. Instead, the pricing didn’t move at all. No, today folks we’re seeing a thirty pound cylinder of R-22 going between two-hundred and fifty to three-hundred dollars a cylinder.

Yes, you heard me right. We are at rock bottom prices here. Remember what I said about alternatives just a bit ago? That four-hundred dollar sweet spot? Well, we’re not even close. Alternatives and reclamation are no longer competitive. There is just too much product out there. The market has been flooded and it’s a race to the bottom as everyone keeps lowering their prices to offload their product before the deadline comes.

Now, don’t get me wrong. After 2020 distributors can still sell R-22… but a lot of folks are wanting to get out now. The reason for that is all of these R-22 machines out there are from 2010 or earlier. At the beginning of the phase out the EPA stated that no NEW R-22 machines could be manufactured within the United States.

So, if you have an R-22 unit running at your location that unit is nearly ten years old already. Even before the phase out began in 2010 manufacturers were switching to R-410A models in anticipation. So, your R-22 unit may even be closer to fifteen years. They say that an average home air conditioner will last between fifteen to twenty years. These units are on borrowed time.

Herein lies the problem. The demand for R-22 is going to drop soon and it will drop quickly. With each year that passes more and more R-22 air conditioners are being retired and replaced with R-410A. This decline in demand will also lead to an even lower price point of the product.

These distributors are walking a fine line. If they hold onto their R-22 product until after the 2020 phase out there is a chance that the price could rise again. However, the demand is going to start dying down soon as well. When is the right time for them to unload their product?

During this summer there were quite a few times where the price dipped down five or ten dollars a cylinder. In most cases when this occurred it was due to a distributor unloading their backlogged product and removing themselves from the R-22 game.

Conclusion

The question now is what will happen over the next few months. Will prices remain flat until January hits? Will we see an increase in January? If so, how much? Over the years of writing articles on refrigerant I have learned one important thing. Do not try to predict. The market is anything but stable and it is very difficult to say what will happen.

The key point I will make here in this article though is if you are a contractor and are needing R-22 refrigerant NOW is the time to buy. Heck, now is the time to stock up. I do not say this in anticipation of higher prices, as I just don’t know what the market will do, but I say this due to rock bottom prices.

I’ve been running this blog for about five years now and this is the lowest I’ve seen R-22. It may or may not go up in 2020 but I’d rather have the peace of mind now and get a hold of that low priced product.

Thanks for reading,

Alec Johnson

RefrigerantHQ

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