Overcapacity in Chinas
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 Chinas exports moving into the new
Subsequently, these market forces
alongside international pressures for cleaner chemical
production are expected to force structural change in the
From quantity to
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 Chinas 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 countrys suppliers
can position themselves as leading producers.
Comprehensive data and
analysis for global mineral industries. Graphite and fluorspar
Andy Miller, Analyst
Albert Li, Analyst