R-22 and Other Refrigerants–Will There be Enough?

June 10, 2016

With summer beginning, the supply of various refrigerants will be affected by several different conditions, which will likely result in spot shortages for the entire season. R-22 is now in its last three years of EPA-allocated new production and will continue to be in short supply. The limited approximately 18 million pound total production allowance for 2016 has already proved to be too low to support the ‘normal’ purchasing patterns of many contractors and customers.

Airgas Refrigerants’ Senior Vice President, Sales & Purchasing, Jay Kestenbaum, noted that market conditions, combined with allocation and trade issues, make planning essential. “In addition to rising prices, many contractors have already found that wholesale suppliers are running out of product due to insufficient monthly allocations.

With the summer heat spreading coast to coast, the problems will only get worse,” he added. This situation is not a surprise however, Kestenbaum pointed out, as EPA-mandated cutbacks have been well-publicized throughout the industry by manufacturers. “Customers have been informed by manufacturers that there has been a real need for proper planning over the past many years,” he said.

Anti-dumping petitions that have been filed by the American HFC Coalition against Chinese producers and importers regarding several HFCs, as well as a separate petition covering R-134a, have resulted in the recent cessation of Chinese imports. All of these refrigerants will be potentially subjected to substantial duties expected to be imposed by the Department of Commerce and the International Trade Commission over the latter half of 2016.

With China producing enormous amounts of product brought into the United States during 2015 and 2016, U.S. manufacturers have had difficulty planning production levels. Until these imports have moved through channels to end customers, it will be hard for domestic producers to properly plan and produce domestic inventory for the timely demands of this significant market.

This unpredictable inventory situation has already resulted in spot supply shortages of different HFCs and R-134a in various sizes throughout the country, and will likely continue until there is clarity of expected demand. U.S. suppliers are gauging risk as they plan production and inventory levels. If the anti-dumping petitions are not successful in the final rulings, domestic producers could be saddled with an oversupply of inventory.

If the Chinese product is again allowed to come in at unreasonably low prices as a result of a negative determination by regulatory bodies, then domestic producers risk being unable to sell product at fair market values. For purchasers of refrigerants, this season requires careful planning—with a watchful eye on the new season—and on next year’s possibilities.