27 June 2017

Refrigerant Prices on the RISE

REFRIGERANT end users are being urged not to opt for cheaper, inferior substitutes as global refrigerant prices continue to skyrocket. This could have
a major impact on health and safety, and even result in deaths, if the incorrect product or packaging is used.

The increase in refrigerant prices globally is attributable to the spike in the price of fluorspar, a key ingredient in hydrofluoric acid (HFA), used in the production of hydrofluorocarbon (HFC) refrigerants. The price of fluorspar recently reached a fouryear high in China, the largest global producer.
This means that fluorspar prices have increased dramatically by 40% since February.

The impact on the refrigerant industry has been a massive 60% increase in the price of R22 and R134a, a 130% increase in the price of HFC component R125, and a 160% rise in the cost of R32.

“With the majority of South African refrigerants imported from China, the increases in our local cost prices will mirror the increases now being experienced by China,” A-Gas South Africa National Sales Manager Michael Labacher comments.

He adds that while the price of fluorspar, and subsequently HFA, has been increasing since the beginning of the year, a steep rise has been noticed since April. “A-Gas South Africa has tried to hold off any price increases. However, due to the continuation of the increases and their magnitude, we have no option but to pass on these increases to the market effective 1 June, and can expect monthly increases going forward.”  

Labacher cautions that customers need to be vigilant when buying refrigerant. Following a similar price spike in 2012, a lot of inferior product entered the market, both locally and abroad. This can have serious consequences in terms of health and safety if cheaper, dangerous, and potentially lethal products are blended in or substituted, but labelled falsely. “Securing the long-term supply of premium refrigerants for our valued
customers remains the top priority for A-Gas South Africa.”

However, the current supply-and-demand constraints are not new to the industry. Global inventories of R134a have been tight since 2010, with prices more than doubling, and close to tripling, due to the increase in raw-materials cost and highcapacity utilisation. In addition, R125 – a key component of many blends such as R507, R404A, R407C and R410A – has also seen a dip in its global inventories since 2010.

Global market demand has grown dramatically, especially in Asia, accelerated by the Chinese government issuing stimulus packages and energy programmes resulting in greater domestic use of blended refrigerants containing R125. Compounding the situation is that the demand for HFCs has grown dramatically in Europe as the cooling industry adapts to life after HCFCs, with some global suppliers being affected by
operational issues regarding R125.

As to what can be done to mitigate the situation in South Africa, Labacher elaborates: “Unfortunately, the alternatives have been the HFCs which have always been slightly more expensive, but even here we still see prices rising as a result of what is occurring in China,” Labacher concludes.

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