EB SECURITIES has released a research report stating that rigid HFCs quotas combined with synchronized domestic and international demand are expected to sustain the high prosperity cycle for third-generation refrigerants. The acceleration of domestic substitution for high-end materials, alongside the semiconductor and AI waves, is driving fluorine-containing new materials into a period of rapid growth, with leading companies undergoing a deep transformation towards higher value-added segments. There is also intensive layout in fourth-generation refrigerants to seize the global substitution opportunity. The main views of EB SECURITIES are as follows:
Supply Quota Constraints and Rising Demand Drive Continuous Price Increases for Third-Generation Refrigerants
Since China's HFCs officially entered the quota era in 2024, the industry's supply side has entered a phase of strong constraints. Based on total production quota calculations for various HFC varieties, China's HFCs production quotas for 2024-2026 are 748.5 thousand, 791.9 thousand, and 797.8 thousand tons, respectively, with domestic production quotas of 342.3 thousand, 389.6 thousand, and 394.1 thousand tons. Under the premise of a determined total carbon emission allowance, China's overall HFCs production quota remains roughly stable, establishing a rigid foundation for supply-side support. On the demand side, national subsidies and appliance replacement policies in 2026 continue to exert force, with consumption-boosting policies demonstrating strong continuity, significantly stimulating growth in downstream air conditioner and automobile sales. With ongoing supply-demand improvements, prices for core third-generation refrigerant varieties have continued to trend higher with volatility. As of July 3, 2026, prices for R32, R125, and R134a were 64,000, 55,000, and 64,000 yuan per ton, respectively, up 1.6%, 14.6%, and 10.3% from the beginning of the year. As the rigidity of quotas continues to manifest and downstream demand gradually releases, we are optimistic about third-generation refrigerants maintaining a high level of prosperity.
Postponed Phase-Out in US and UK Extends Demand, Further Widens Refrigerant Export Premiums
Recently, the two major overseas core markets, the United States and the United Kingdom, have successively slowed down the phase-out process for third-generation refrigerants, providing strong support for the continuation of China's HFCs export demand in the short term. In May 2026, the UK's Department for Environment, Food & Rural Affairs announced a delay to the F-gas phasedown measures originally scheduled for implementation on January 1, 2027. On the 21st of the same month, the US government also officially announced the repeal and amendment of previously stringent control regulations for the refrigeration and air conditioning sectors, extending the compliance use period for HFC refrigerants and relaxing related restrictions. Due to limited local production capacity and high dependence on imports in the US and UK, and with expectations of prolonged demand, overseas companies have a strong willingness to raise prices. The UK's largest refrigeration and air conditioning wholesaler, Beijer Ref UK, subsequently announced significant price increases effective May 20, 2026: R410A and R407C prices were raised by 60%, while R134a and R32 prices were increased by 35% and 30%, respectively. Benefiting from sustained demand warming, the industry's high-profit cycle is expected to be further extended.
Accelerated Domestic Substitution for High-End Materials, Semiconductor and AI Waves Drive Fluorine-Containing New Materials into Rapid Growth Phase
Leading domestic fluorochemical companies are accelerating their layout in fluorine-containing new materials, focusing on building a second growth curve. In the semiconductor sector, high-purity (e.g., G5 grade) electronic-grade hydrofluoric acid, an indispensable key wet electronic chemical for chip manufacturing, was long monopolized by Japanese and American companies. In recent years, domestic companies have broken through the ultra-clean, high-purity process bottleneck leveraging their integrated industry chain advantages. Electronic-grade hydrofluoric acid has successfully passed stringent certifications from leading domestic and international wafer foundries and entered the stage of large-scale volume production. Concurrently, the rapid increase in computing power for AI, HPC, and hyperscale data centers is driving up heat density in data centers. Traditional air-cooling solutions are increasingly inadequate for high-power-density scenarios, making liquid cooling an essential solution for efficient heat dissipation. Fluorochemical companies are aligning with the efficient heat dissipation trend by actively developing high-performance fluorine-containing coolants like perfluoropolyether (PFPE). Leveraging their insulating, non-flammable, and excellent thermal management properties, these materials occupy an irreplaceable position in high-safety, high-power scenarios such as immersion cooling. Fluorine-containing new materials are propelling fluorochemical companies towards a deep transformation into high-tech-barrier, high-value-added directions.
Domestic Companies Accelerating Expansion into Fourth-Generation Refrigerant (HFOs) Sector
1) Juhua Co., Ltd.: As an industry chain leader, it possesses the capability to supply a full spectrum of fluorine-containing refrigerants from first to fourth generations. Its subsidiary, Lianzhou Zhileng, is actively expanding a 19,000 tons/year fourth-generation environmentally friendly mixed refrigerant project.
2) Sanmei Co., Ltd.: Announced an investment of 1.57 billion yuan to construct 10,000 tons/year HFO-1234yf capacity, consolidating its refrigerant business advantage.
3) Yonghe Co., Ltd.: Through a large-scale private placement, it is raising funds to primarily advance the Baotou new materials project, planning to build 20,000 tons/year HFO-1234yf, 13,000 tons/year HFO-1234ze, and 10,000 tons/year HCFO-1233zd capacity.
4) Tahoe Group Co., Ltd.: Entered the fluorochemical track through its wholly-owned subsidiary Jiangxi Tianyu Chemical, possessing 14,000 tons/year 1,1,2,3-tetrachloropropene capacity. Within this, a 12,000 tons/year "refrigerant-grade" project is the world's exclusive mass production, dedicated to supplying Honeywell for synthesizing fourth-generation refrigerants.
Risk warnings: Downstream demand falling short of expectations; risks related to quota policy changes; significant fluctuations in raw material prices.
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