China Refrigerant Prices Hit Record Highs in 2026

China's refrigerant market has experienced broad-based and sustained price increases over the past six months, with multiple products reaching record highs. By the end of June 2026, prices of several mainstream refrigerants had risen sharply, reflecting a combination of supply restrictions, higher production costs and robust downstream demand.

Among the strongest performers, R125 and R32 recorded cumulative gains exceeding 60% during the six-month period. Prices of R410A, R143a, R404A/R507A and R22 climbed more than 50%, while R227ea and R134a advanced by more than 14%.

R134a provides a representative example of the sector's rally. By the end of June 2026, the market price of R134a in China had exceeded 62,000 yuan ($/tonne not specified) per tonne, rising by more than 7,000 yuan per tonne over the previous six months, equivalent to a gain of more than 14%.

R134a, also known as 1,1,1,2-Tetrafluoroethane, is an environmentally friendly refrigerant widely used in automotive air-conditioning systems and household refrigerators. Its non-toxic and non-flammable characteristics have made it the mainstream replacement for the older R12 refrigerant. Although R134a does not deplete the ozone layer, its relatively high Global Warming Potential (GWP) has led China to restrict the construction of new production facilities for HFC-134a intended for refrigerant use since 2022.

Price data from 2012 to 2026 show that the average market price of R134a during the first half of 2026 reached approximately 58,000 yuan per tonne, surpassing all annual averages recorded over the previous 14 years and setting a historical high. While R134a has become one of the industry's benchmark products, its price increase during the past six months was smaller than that of many other refrigerants, underscoring the exceptional strength of China's refrigerant market in 2026.

Based on theoretical profit margin calculations, the theoretical profitability of R134a had climbed to around 65% by mid-2026, continuing a four-year upward trend and placing it among the more profitable chemical products in China.

Market analysts believe several factors have contributed to the sharp rise in refrigerant prices across China in 2026.

Strict Quota Management Keeps Supply Constrained

China's third-generation HFC refrigerants remain subject to strict production quota management. Total quotas increased only marginally in 2026, effectively freezing domestic fluorinated refrigerant production capacity.

The quota system has also concentrated supply among six leading producers that collectively control more than 90% of production quotas. Producers have maintained disciplined operating rates while limiting spot sales to support prices.

At the same time, production quotas for second-generation HCFC refrigerants continue to decline annually. Supplies available for the maintenance market have gradually tightened, leaving little room for overall supply expansion and creating a long-term environment of tight market balance.

Rising Raw Material Costs Increase Production Expenses

Many chemical products in China recorded notable price increases during the first half of 2026. Fluorspar and hydrofluoric acid, two essential raw materials for refrigerant production, both became more expensive as fluorite resources tightened. Spot prices of hydrofluoric acid rose continuously, posting cumulative gains of more than 23% over the past six months.

Higher raw material costs have prompted manufacturers to raise ex-factory prices to offset production expenses. However, current profit margins remain strong. Hydrofluoric acid accounts for roughly 58% of R134a's total production cost, yet prevailing market prices remain well above production costs, allowing manufacturers to absorb higher input prices while maintaining attractive profitability.

Peak Summer Demand Drives Inventory Replenishment

The arrival of China's summer cooling season has strengthened downstream demand. Home appliance manufacturers typically secure procurement contracts during the second quarter, leading to rapid growth in orders for refrigerants such as R32 and R410A and providing additional support for higher prices.

Demand has also remained strong in cold storage and cold-chain logistics, where both new equipment installations and maintenance-related refrigerant replenishment have contributed to increased consumption.

New Energy Vehicles Create Additional Demand

Heat pump air-conditioning systems used in new energy vehicles have become an increasingly important source of refrigerant demand. Refrigerant consumption per vehicle is significantly higher than in conventional gasoline-powered vehicles, and the continued expansion of the new energy vehicle market has further tightened the supply-demand balance.

Export Demand Strengthens Amid Global Supply Constraints

Analysts also point to international market dynamics. Delays in the phase-out schedules for third-generation refrigerants in Europe and North America have extended refrigerant demand cycles in overseas markets.

Production capacity in many other countries has likewise been constrained by fluorinated gas regulations, limiting supply growth. As a result, overseas traders have increased purchases from China to fill supply gaps in their domestic markets.

Chinese manufacturers have prioritized long-term contract deliveries and export orders, reducing the volume available for China's spot market. Competition between domestic and overseas buyers has further strengthened spot prices.

Refrigerant Inflation May Raise Equipment Costs

If refrigerant prices continue rising, production costs for refrigeration equipment could also increase, potentially affecting product pricing.

Refrigeration equipment covers a wide range of applications, including residential split air conditioners, commercial variable refrigerant flow (VRF) air-conditioning systems, refrigerators and freezers, automotive air conditioners, large cold storage facilities, cold-chain refrigeration units and data center cooling systems.

Among these products, refrigerants account for a relatively high proportion of manufacturing costs in large cold storage facilities, cold-chain equipment and commercial VRF air-conditioning systems, where refrigerant expenses can exceed 10% of total production costs.

With some refrigerant models recording cumulative price increases of more than 60% during the past six months, manufacturers of related equipment could face cost increases exceeding 10%, raising the possibility of future product price adjustments.

Outlook

The broad-based surge in China's refrigerant prices over the past six months has largely been driven by strict production quota management alongside stronger seasonal demand associated with rising temperatures.

If high temperatures persist while production quotas remain constrained, refrigerant prices could retain further upside potential.

Over the medium to long term, high-GWP third-generation refrigerants are expected to be gradually phased down, while low-GWP fourth-generation HFO refrigerants are expected to become the industry's primary direction of transition. Emerging applications, including liquid cooling for AI computing infrastructure and precision temperature control for semiconductor manufacturing, are also expected to create new high-end demand.

As the industry shifts from capacity-driven competition toward low-carbon refrigerant technologies, quota-related supply advantages may continue to support the market in the near term, while green refrigerant alternatives are expected to represent the industry's longer-term development path.