HFC-134a Export Expansion in Great Urgency    

By Zhang Lizhe      

1,1,1,2-tetrafluoroethane (HFC-134a) is a new refrigerant. It has the features of no toxicity, no odor, no color, no inflammability, no explosion, good thermal stability and stable chemical property. Its ODP (ozone depletion potential) is zero. It has a refrigerating ability similar to F12. HFC-134a is therefore an ideal substitute for ODS (ozone depleting substance) and has been extensively used in automobile loaded air-conditioning, central air-conditioning and industrial refrigeration sectors. It can also be used as aerosol, flame-retardant and blowing agent in pharmaceutical, pesticide, cosmetic and cleaning sectors.

Outstanding achievements
in technology research and
development

In March 1999 Sinochem Modern Environmental Protection Chemicals (Xi'an) Co., Ltd. constructed a 200 t/a HFC-134a pilot unit. The capacity of HFC-134a in the company reached 10 200 t/a in 2006. (CCR2006, No 18) With the completion of the 20 000 t/a unit in Sinochem Taicang Environmental Protection Chemicals Co., Ltd. in January 2007, (CCR2007, No. 5) the capacity of HFC-134a in Sinochem Group has reached 30 200 t/a. Other producers in China mostly use technologies imported from abroad in their production units. For example, Zhejiang Juhua Co., Ltd. has constructed a 10 000 t/a HFC-134a unit with technology imported from Showa Denko of Japan.
   By January 2007 China approved 21 patents of HFC-134a production methods and processes such as purification and rectification. Only 5 of them are owned by domestic organizations. All the others are patents applied for by foreign companies in China. In terms of production technology, local organizations owns four patents, two were held by Shanghai Institute of the Chinese Academy of Sciences, one was held by Xi'an Research Institute of Modern Chemistry and one was held by Zhejiang Fluorescent Chemical Co., Ltd.

Surplus in capacity

The United States, Europe and Japan were the major HFC-134a producers worldwide in the past. The capacity of HFC-134a in foreign countries exceeded 200 000 t/a in 2005. Some foreign fluorine chemical enterprises closed HFC-134a production units after 2005. The capacity of HFC-134a production units in foreign countries was reduced to 173 000 t/a in 2006. By contrast, the capacity of HFC-134a in China grew rapidly in 2006. By January 2007 the capacity of HFC-134a in China already reached 100 000 t/a and China became a major HFC-134a producer in the world. The price of HFC-134a dropped sharply in the second half of 2006. Some producers reduced the operating rate or even suspended production. According to statistics, the actual output of HFC-134a in China was around 20 000 tons in 2006 and the average operating rate was only 20%.
   Due to the unduly rapid capacity expansion and the relatively small domestic demand, the HFC-134a market has fierce competition, the product price keeps going down and the gross profit in producers is becoming thin. The selling price of HFC-134a at the end of 2006 was around 50% lower than the end of 2005. The price went further down in 2007. The price of HFC-134a for domestic sale dropped sharply from RMB50 000-55 000 per ton in the first half of 2006 to RMB30 000 per ton in the first half of 2007. Thanks to high technical level, low production cost and strong comprehensive force, key producers still retain some advantages, but small producers are having a difficult situation because of their problems in technology and capital.
   Meanwhile, the export has also become a focus for the competition between domestic producers. China totally exported 11 000 tons of HFC-134a in 2006. The United States and Asian countries were the main destinations of export. Major exporting enterprises included Sinochem Group and Jiangsu Contake Fluorine Chemical Co., Ltd. China exported nearly 1 970 tons of HFC-134a in January 2007, an increase of almost 2.5 times compared with the same period of 2006, but the average export price was down by nearly 40%.
   The capacity of HFC-134a in China has a serious surplus and the product sales mainly depend on export. The HFC-134a production in China, however, has scattered production scale, low technical level and weak overall competitiveness. The product market is mainly in the after-sale maintenance sector. As a result of the price drop and the profit reduction, many foreign producers have changed their market strategies. Domestic producers can use this opportunity to conduct strategic cooperation with well-known foreign enterprises and expand exports.

Major HFC-134a Producers in China in 2007
(thousand t/a)
Producer                       Capacity
Sinochem Group                  30.2
Shandong Dongyue Chemical Group    15.0
Jiangsu Contake Fluorine Chemical Co., Ltd.    15.0
Zhejiang Juhua Group             10.0
Jiangsu Jinxue Group Co., Ltd.    18.0
Source: CNCIC