Price rises fail to mask China’s fluorocarbon deficiencies

By Andrew Miller
Published: Wednesday, 29 October 2014

Downstream overcapacities stunt fluorspar growth

Overcapacity in China’s fluorocarbon market continues to prevent a recovery in the prices of HFC and HFO chemicals.

Although restrictions on the production of HCFCs took some capacity offstream in H1 2014 - causing price rises throughout Q3 2014 - structural issues continue to threaten producer profit margins.

Industry sources suggest persistent capacity growth has seen production across the Chinese market fall below 60% of capacity, on average, with few signs of a significant upturn in demand in the short-term.

These capacity issues are likely to be compounded in the medium-term as major consumers in the US and Europe seek to limit HCFC and HFC emissions.

Furthermore, the US investigation into the alleged dumping of Chinese fluorochemcials could see restrictions on China’s exports moving into the new year.

Subsequently, these market forces alongside international pressures for cleaner chemical production are expected to force structural change in the Chinese market.

From quantity to quality

Many industry figures within China are keen to see greater investment in R&D rather than capacity expansions, as the country attempts to position itself as the dominant power in the fluorocarbon space.

While Chinese fluorochemcial patents have been increasing, US and Japanese companies continue to dominate developments in the market.

To ensure the future sustainability of China’s fluorocarbon sector, however, a shift towards higher quality exports will be required.

These developments will involve the pursuit of new and niche fluorochemcial markets, in which the country’s suppliers can position themselves as leading producers.

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Andy Miller, Analyst

Shruti Salwan, Analyst


Albert Li, Analyst