According to institution monitoring, the overall quota for R32 and R125 from January to April was overused, which means that quotas in the second half of the year may face a tight situation, leading to further price increases for related products.
As of May 31, R32 prices and differentials were 36,000 and 22,846 yuan/ton, respectively, unchanged from the same period last week, and +0.69%; R125 prices and differentials were 40,000 and 22,472 yuan/ton respectively, down by -1.23% and -0.53% respectively from the same period last week; R22 prices and differentials were 29,000 and 19,015 yuan/ton respectively, unchanged from the same period last week and +0.39%.
Huaan Securities pointed out that starting from 2024, the supply of the third-generation refrigerant will enter the stage of 'quota + continuous reduction,' while the second-generation refrigerant will be accelerated to be phased out. The fourth-generation refrigerant is difficult to replace due to patent issues and its price remains high, leading to a continuous reduction in refrigerant supply. At the same time, with the development of the heat pump and cold chain market and the continuous expansion of the air conditioning inventory market, coupled with the expansion of refrigerant demand in Southeast Asian countries and other factors, the demand side maintains steady growth.
At the same time, with the development of the heat pump and cold chain market and the continuous expansion of the air conditioning inventory market, coupled with the expansion of refrigerant demand in Southeast Asian countries and other factors, the demand side maintains steady growth.
The future refrigerant market supply and demand gap will continue to expand, and refrigerant prices will remain stable and rise. Companies with a higher proportion of quotas will fully benefit.
Huaxin Securities pointed out that the refrigerant industry will enter the peak season in June and July, and prices have the potential for further increase. It is recommended to continue to focus on investment opportunities in the refrigerant industry.
In 2024, due to the mismatch between supply and demand, the bottom feature has been revealed. Some leading companies in some subdivisions of the industry have a historic investment opportunity with a triple bottom (cyclical bottom, profit bottom, and valuation bottom).
Refrigerant-related companies:
Dongyue Group (00189): The revenue of Dongyue Group mainly comes from polymer materials, organic silicon, refrigerants, as well as dichloromethane, PVC and caustic soda. In 2023, the above-mentioned products will contribute revenue of 4.552 billion yuan, 4.862 billion yuan, 2.872 billion yuan, and 1.177 billion yuan respectively, with corresponding revenue proportions of approximately 31.4%, 33.5%, 19.8%, and 8.1%. Dongyue Group's R22 production capacity is the highest in the world. In addition, Dongyue Group's refrigerant products include more than 10 products, such as R32, R125, and R134a, all of which have risen in price to varying degrees since this year.