Ambiguity over HFC phase out clouds acidspar demand picture

By Shruti Salwan
Published: Monday, 30 November 2015

Non-Article 5 countries to lead the phasing out, with China likely to influence consumption trends. Transition to HFOs will also prompt fluorine demand.

Reducing greenhouse gas emissions (GHG) by phasing out hydrofluorocarbons (HFCs) remains a priority for many countries, however factors such as government policy, available financing for transition to alternatives and differences between end use provisions are creating uncertainties over the impact this will have on demand for acid grade fluorspar (acidspar).

Moves to cut GHG emissions through stricter environmental regulations are also generating ambiguity around how the transition to hydrofluoroolefins (HFOs) as replacements for HFCs will affect the market.

The US government recently announced new private sector commitments aimed at shrinking the use of HFCs and encouraging the development of new eco-friendly alternatives.

However, the approaches of Article 5 (developing) and Non-Article 5 (developed) countries (as defined by the Montreal Protocol – an international treaty signed in 1987 aimed at protecting the ozone layer by removing damaging substances from industrial and consumer usage) towards phasing out HFCs differ because of variations in national reduction schedules and the targets different countries set.

Consumption rates of hydrofluoric (HF) acid, the principal feedstock for fluorochemicals and fluoropolymers, stand to be most affected by this initiative in the short term and the fluorspar industry is anxious to receive some clarity on how the situation is likely to develop.

According to Ray Will, director of chemical industry consulting at industry consultancy IHS, Article 5 countries, which include China, India and other developing economies have markedly different phase-down schedules to Non-Article 5 countries, such as the US, Japan and European nations.

Having established a leading market position in the last decade, China is concerned with remaining dominant in HFC and HF production and is therefore paying close attention to how the phase-down scheduling will affect its HF capacity. 

Will said that while HFC phase down is gaining pace in Non-Article 5 countries, major declines are still several years away for the US, with developed economies still consuming HFCs, and HFO usage growing in both categories of country.

"[In the] short term, this market trend will have a positive impact on acidspar demand," Will said. "However, in the longer term, growth will likely remain slow, as non-fluorinated refrigerants become more prevalent."

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Slower manufacturing and demand for refrigerants in developing
economies has hit acidspar demand. (Source: Jay)

Declines in future HF consumption expected

Tightening restrictions by the US Environmental Protection Agency (EPA) on the consumption of HFCs – with measures aiming to cut the equivalent of more than 1bn tonnes carbon dioxide (CO2) by 2025 – a decline in HF consumption rates looks probable. It is especially likely, given that a number of major US fluorochemical producers have already taken steps towards phase out.

New York-listed Honeywell, one of the world’s leading fluorochemical companies, has announced a range of low global warming potential (GWP) products that will reduce GHG emissions by 475m tonnes CO2 by 2025. Meanwhile, The Chemours Co., which was recently spun out of US chemicals conglomerate, DuPont, has outlined plans to encourage consumption of its newly developed HFO-1234yf sustainable refrigerant.

Since HFOs are richer in fluorine content than HFCs, the growth in HFO production will counter some of the decline from HFC phase out.

While this trend is likely to be observed in the longer term, the current soft demand for HF acid and acidspar has been caused by the slowdown in global economies, especially in China, where demand for refrigerants and other types of fluorspar-based industrial chemicals has declined in line with lower manufacturing output.

IHS’ Will told IM that although HFC phase outs will have an impact on future demand for HF acid, decelerating growth in China has had an immediate impact on the market, thanks to the decline in the country’s aluminium and steel industries, which are major fluorine-consuming markets.

The US and Europe are expected to remain at the forefront of the phase out trend, meanwhile, which will have an impact on the market in these regions.

However, a rise in the production of HFOs will lead to direct and indirect increases in acidspar demand between 2015 and 2019 for Non-Article 5 countries.

Improved acidspar consumption rates 

Acidspar demand is primarily driven by the fluorochemicals and aluminium fluoride markets. Both sectors consume HF acid as an intermediate product, which is almost entirely manufactured from acidspar.

However, demand from the two major downstream markets has dropped considerably since 2012.

While regulations and environmental concerns have renewed the focus on next-generation chemicals, namely HFO alternatives, following the successful suppression of chlorofluorocarbon (CFC) and hydroc-hlorofluorocarbon (HCFC) emissions, these will have limited impact on acidspar consumption. 

Industry sources told IM that demand within Asia, mainly from India and China, is likely to surge in the more distant future, counterbalancing declines in other regions.  

Transition to HFOs will continue to be gradual, as UN negotiations on this topic are yet to be concluded.

The effects of an extension of fluorocarbon emission legislation will therefore not have a major impact on demand for acidspar. Meanwhile, substantial growth in the fluorocarbon industry approaching 2020 can be expected, owing to environmental targets encouraging the uptake of these substances, which will see diversification in acidspar demand.