Guosen: In July, refrigerant prices continued to rise, and the profits of fluorochemical companies continued to grow.

Guosen released a research report stating that the reduction in compliance with second-generation refrigerants will occur by 2026, while the third-generation refrigerant quota system will continue. The industry concentration for varieties such as R32, R134a, and R125 is high. The conversion ratio between third-generation refrigerant varieties is expected to grow year-on-year, resulting in increased flexibility for companies in production and allocation. It is anticipated that mainstream third-generation refrigerants will maintain a tight balance between supply and demand in 2026. The firm believes that tightening restraints on refrigerant quotas is a long-term trend, which bodes well for the continued prosperity of major refrigerants like R32, R134a, and R125, with significant upward price potential in the long run. Leading companies in the refrigerant quota sector are expected to maintain a high level of profitability over the long term. Additionally, there is optimism regarding the growing demand for fluorinated electronic materials in the semiconductor sector, with a recommendation to focus on the price and volume increases of electronic-grade PTFE, ultra-pure PFA, electronic-grade hydrofluoric acid, fluorinated specialty gases, and fluorinated liquids. Guosen's main points are as follows: July Fluorochemical Market Review As of the end of July (July 31), the Shanghai Composite Index reported at 3832 points, down 6.40% compared to the end of June; the CSI 300 Index reported at 4589 points, down 7.86% from the end of June; the Shenwan Chemical Index reported at 4113, down 13.70% compared to the end of June; and the fluorochemical index reported at 1925 points, down 16.62% from the end of June. The fluorochemical industry index lagged behind the Shenwan Chemical Index by 2.92 percentage points, the CSI 300 Index by 8.76 percentage points, and the Shanghai Composite Index by 10.21 percentage points. According to the Guosen Chemical Price Index, as of July 31, 2026, the Guosen Fluorochemical Price Index and the Guosen Refrigerant Price Index stood at 1415.9 and 2155.3 points, respectively, representing increases of +0.76% and +0.29% compared to the end of June. In July, PVDF and PTFE exhibited varying degrees of decline, while some refrigerants such as R22, R134a, and R32, as well as fluorite, showed different levels of price increases. Prices of mainstream refrigerants R22, R32, R134a, and R410a continue to rise According to Fluorochemical Online and Sublime China Information, as of August 3, 2026, the price of R22 remains at 24,000-25,000 yuan/ton. The price of R32 has risen to 64,500-65,500 yuan/ton. At the end of June, domestic refrigerant companies quoted R32 at 65,100 yuan/ton for cash and 65,600 yuan/ton for acceptance, an increase of 2,900 yuan/ton compared to the second quarter. The prices of R410a/R404/R507 remain at 60,000/53,500/53,500 yuan, with the cash quote for R410a in the third quarter reported at 60,000 yuan/ton and acceptance at 60,500 yuan/ton. The price of R134a remains at 64,000-65,000 yuan/ton. The UK and the US adjust the phase-out pace of third-generation refrigerants, benefiting China's refrigerant export volumes and prices According to Fluorochemical Online, the UK recently postponed its "more stringent" HFC phase-out plan, prompting the largest refrigerant wholesaler in the UK to raise prices for products like R410a and R407c. The US Environmental Protection Agency finalized amendments to the "2023 Technology Transition Rule" on May 21, extending the compliance period for hydrofluorocarbon refrigerants and relaxing related usage restrictions to allow companies to opt for a wider range of cost-effective refrigerant products. The recent adjustments in the phase-out pace of third-generation refrigerants by the UK and the US are not a denial of the Kigali Amendment but rather a correction of the overly aggressive local policies of the past several years. The core implication is that while third-generation refrigerants have not departed from the long-term trend of restrictions, their practical lifespan and maintenance replacement cycles in developed countries have been extended, leading to a noticeable slowdown in the rate of demand decline in the short to medium term. As a major global supplier of refrigerants, China is seeing increased certainty in exporting, restocking, and negotiating prices. High temperatures in Europe drive demand for air conditioning In January and February 2026, production schedules showed variation due to the influence of the Spring Festival holiday. In March and April, domestic production schedules for household air conditioners demonstrated strong resilience, supported by installation demand driven by the housing completion requirement. The industry's fundamentals still provide support, resulting in only a slight year-on-year decline against a high base from the previous year combined with rising raw material costs. In May, under pressures from costs and inventory, production plans were adjusted downward; in June, boosted by the "618" consumption festival, terminal sales improved compared to expectations but still fell significantly short year-on-year. July saw a slight increase in production schedules, primarily driven by inventory replenishment needs from certain brands. In August, some compressor and air conditioning companies are preparing for equipment maintenance and factory holidays, resulting in a slight decrease in production scale. Regarding exports, according to customs data, China exported a total of 39.14 million air conditioners from January to June 2026, a year-on-year decline of 4.7%. The export market has been on a downward trend since May 2025, with high base figures and inventory pressures due to pre-hand stockpiling. Exports have declined for eight consecutive months year-on-year. After the overseas Christmas peak season at the end of the year, a routine restocking cycle will commence, with production schedules showing variation in January and February 2026 due to the domestic Spring Festival. In March, as the impact of the Spring Festival faded, the decline in export production schedules narrowed rapidly. However, due to a high base formed by concentrated restocking overseas in 2025, combined with increased transportation costs from the Middle East conflict, export production schedules still saw a year-on-year decline from March to June. Nevertheless, high temperatures in the European market have activated segmented demand, leading to explosive growth in mobile air conditioners. In August, the decline in export production schedules narrowed, with signs of recovery in orders from Latin America, North America, and the Middle East gradually emerging. Regarding domestic production, according to Industrial Online, August 2026 production schedules stood at 5.87 million units, a year-on-year decline of 24.1%; for export production, August 2026 saw production schedules of 4.86 million units, a year-on-year decline of 8.1%. Focus on the rapid growth in demand for fluorinated electronic materials driven by AI High-end fluoropolymers, (1) PTFE: Nvidia has initiated tests for Rubin Ultras M10 CCL materials, where AI servers bear a massive amount of computational power signal transmission, and upgrades to the M10 system necessitate higher requirements for the dielectric constant and dielectric loss of materials. With a dielectric constant as low as 2.0-2.1 and a loss factor around 10^-4-10^-5, PTFE demonstrates significant dielectric performance advantages in high-frequency millimeter-wave scenarios, making it one of the alternative resin options for the M10 system. (2) PFA: High purity PFA has long been monopolized by overseas companies and is widely used in key processes such as semiconductor wafer cleaning, etching piping, and high-purity reagent delivery. At the beginning of May, Zhejiang Juhua's subsidiary, Jusheng Fluorine Chemical, successfully completed its first shipment of qualified products of ultra-pure PFA, officially entering the market. Meanwhile, Shaowu Yonghe's high-purity PFA project has entered trial production as of October 2025, with associated process validation and performance optimization work progressing in an orderly manner. Electronic-grade hydrofluoric acid, with anhydrous hydrofluoric acid being the primary material for producing electronic-grade hydrofluoric acid, is facing tight supply of sulfur due to the impact of the Middle East conflict on hydrofluoric acid raw materials. According to a report by the China Taiwan Economic Daily on July 1, industry sources indicated that TSMC, Samsung, and SK Hynix are competing to purchase electronic-grade hydrofluoric acid. The rising cost of raw materials has driven up costs of electronic-grade hydrofluoric acid, with some suppliers already starting to raise prices, with increases of about 20% to 30%. Additionally, BOE uses buffered oxide etchant, which is a mixture of hydrofluoric acid and ammonium fluoride, enhancing stability and controllability during the etching process. Fluorinated specialty gases are benefiting from a new round of significant capital expenditures by Samsung Electronics and SK Hynix, boosting upstream electronic materials demand. Furthermore, due to the increase in gas consumption per wafer driven by computational chips, HBM, 3D NAND advanced nodes, and multi-layer stacking, the demand for electronic gases is expected to create a multiplier effect on increased gas consumption for wafer expansion. Fluorinated specialty gases, such as hexafluorobutadiene, can enhance etching precision and efficiency needed for advanced storage etching; tungsten hexafluoride can be used for advanced logic, DRAM, and 3D NAND plasma-deposited tungsten conductor films. As AI technology develops, the power density of servers has significantly increased, and traditional air cooling methods have reached a bottleneck. Liquid cooling technology can effectively reduce the PUE of data centers, with immersion cooling and two-phase cold plate cooling becoming future trends, driving rapid growth in demand for upstream fluorinated liquids and refrigerants. Fluorochemical News of the Month Gansu Juhua's silica-fluorine project passed production review; Zhejiang Yonghe Refrigerant achieved a net profit of 513 million yuan in the first half of 2026, a year-on-year increase of 89.01%; Zhejiang Sanmei Chemical Industry is laying out wet electronic chemicals; and Zhejiang Juhua has begun mass production of ultra-pure PFA, focusing on the high-end semiconductor market. Risk Warning: Demand for fluorochemical products may fall short of expectations; policy risks (environmental policies for fluorinated refrigerants may tighten, acceleration of upgrade processes, changes in quota allocation policies, etc.); global trade frictions and export restrictions; low real estate cycle prosperity; slower project production progress for various companies; rising raw material prices; and chemical safety production risks, etc.