Concept tracking of Hong Kong stocks | The application window for the fourth generation refrigerant (HFOs) is gradually opening. Institutions attach importance to the competitive advantage of fluorine chemical HFOs (with concept stocks attached).

In 2025, the production quota for third-generation refrigerants (HFCs) is 791,900 tons, an increase of 43,400 tons from 2024. The domestic production quota is 389,600 tons, an increase of 47,200 tons from 2024. With the implementation of domestic production quotas, some enterprises with small quotas are close to the end of trading, leading to increased costs for purchasing quotas. In an atmosphere where top enterprises are strongly inclined to raise prices, coupled with the current policy background, there is a favorable environment for enterprises to increase prices. Furthermore, due to the significant price gap between domestic export prices and prices offered by other countries, export market prices are expected to further increase. Institutions predict that in 2025, production enterprises will continue to adjust prices for both domestic and international markets. HCFCs/HFCs remain the mainstream refrigerant varieties, and China, as a major global supply force, has seen orderly supply with downstream demand support from air conditioning, automobiles, etc. Since the implementation of the HFCs quota system in 2024, the industry has entered a boom cycle. Huatai has released a report on the basic chemical industry, stating that the window for the application of fourth-generation refrigerants (HFOs) may gradually open, with domestic enterprises striving to break through. HFOs have an Ozone Depletion Potential (ODP) of 0 and a low Global Warming Potential (GWP). With the gradual reduction of global quotas for second and third-generation refrigerants (HCFCs/HFCs), the development and promotion of HFOs are an inevitable trend for the refrigerant industry. In the application end, driven by the reduction of overseas HFCs quotas in 2024, the upward shift of HFCs prices in the domestic quota system, and the promotion of HFOs & HFCs blending schemes, the production end is gradually opening the window for HFOs with the nearing of overseas HFOs patent protection period, breakthrough in industry enterprises' scale technology, and cost reduction. Considering the time needed for the scale production and cost reduction of HFOs, as well as the higher cost and price of HFOs as alternative products, it is expected that the boom cycle of HCFCs/HFCs will be relatively long. The average price of mainstream products (R22/R32/R134a, etc.) is expected to be around 45,000-50,000 yuan/ton in 2025-2026, benefiting industry enterprises significantly. Domestic fluorine chemical enterprises, relying on integrated support from chlor-alkali and fluorine-containing raw materials, as well as R&D investment advantages, are expected to have a competitive advantage in extending HFOs. In the medium to long term, enterprises focusing on HFOs technology and capacity deployment are worth paying attention to, while refrigerant industry leaders, relying on upstream support, are expected to have a competitive advantage in extending HFOs. Related Hong Kong stocks in the fourth-generation refrigerant industry: DONGYUE GROUP (00189): Ranked fourth in domestic HFCs quotas and first in domestic R22 quotas for 2025. DONGYUE GROUP is a leading player in China's fluorosilicone industry, with integrated advantages in the fluorine chemical (hydrofluoric acid+refrigerant+fluorine-containing polymer materials) and silicon chemical (monomer+intermediate+deep processed products) sectors.