Guosen: Overall air conditioner production in April maintained growth, with refrigerant prices rising beyond expectations.

Guosen released a research report stating that by 2025, the acceleration of the reduction of second-generation refrigerants will continue, while the quota system for third-generation refrigerants will be extended. Varieties such as R22 and R32 have a high industry concentration. Factors such as the stimulus of government subsidies, stock replenishment in Europe and America, and increasing demand in emerging regions such as Southeast Asia are expected to significantly increase domestic and overseas production and scheduling of air conditioners. It is forecasted that there will be a supply-demand gap in 2025 for second-generation refrigerants like R22, supported by the rapid contraction of supply and the maintenance market for air conditioners. Although the supply of third-generation refrigerant R32 is expected to increase slightly compared to the previous year, by 2024 the inventory will be depleted, leading to rapid demand growth and a projected tight supply-demand balance in 2025. The bank believes that the tightening restrictions on refrigerant quotas are a long-term trend. In this context, the bank is optimistic about the continued prosperity of second-generation and third-generation refrigerants such as R22 and R32, and believes that prices still have significant room for upward movement in the long term. Leading companies in the quota of second-generation and third-generation refrigerants are expected to maintain high profitability levels in the long term. The bank suggests paying attention to fluorine chemical companies with complete industry chains, complete infrastructure, leading refrigerant quotas, and advanced technology. Guosen's main viewpoints are as follows: Review of the fluorine chemical market in April As of the end of April (April 28), the Shanghai Composite Index closed at 3288.41 points, down 1.42% from the end of March (March 31); the Shenzhen 300 Index was at 3781.62 points, down 2.72% from the end of March; the Shenwan Chemical Industry Index was at 3299.58, down 3.23% from the end of March; and the fluorine chemical index was at 1232.89 points, down 2.60% from the end of March. The fluorine chemical industry index outperformed the Shenwan Chemical Industry Index by 0.63%, underperformed the Shanghai and Shenzhen 300 Index by 0.12%, and underperformed the Shanghai Composite Index by 1.18%. According to the bank's compiled Guosen Chemical Price Index, as of April 28, 2025, the Guosen fluorine chemical price index and the Guosen refrigerant price index were 1235.89 and 1782.03 points, respectively, representing increases of 0.59% and 1.67% from the end of March. Entering the second quarter, driven by high summer temperatures, refrigerant consumption is expected to enter the peak season, with trading activity gradually increasing against a backdrop of low inventory levels. In terms of domestic prices, according to Bai Chuan Yingfu and Zuo Chuang Consulting, this month R22 maintains a price of 36,000 yuan per ton; R134a maintains a price of 47,000 yuan per ton; R125 maintains a price of 46,000 yuan per ton; R32 is priced at 48,000 yuan per ton, an increase of 1,000 yuan per ton from the previous month; R410a maintains a price of 48,000 yuan per ton; R152a is priced at 28,000 yuan per ton, an increase of 1,000 yuan per ton from the previous month; R142b maintains a price of 30,000 yuan per ton; R143a is priced at 46,000 yuan per ton, an increase of 1,500 yuan per ton from the previous month. Regarding refrigerant exports, the export data for the first quarter shows that overseas demand is growing continuously, primarily for R32. Looking at the data from March: R22 increased by 165% compared to the previous period, R32 increased by 150%, R134a increased by 96%, and R125/143 series remained stable. Exports in March significantly picked up, driving demand and prices to converge domestically and internationally. In terms of export prices, as of March 2025, the average export prices for R22, R32, and R134a and other products were still lower than domestic prices, but the price difference for R32 is rapidly converging. Specifically, in March 2025, the average export price for R32 was 39,742 yuan per ton, with a price difference of 6,133 yuan per ton compared to the domestic price; the average export price for R22 was 21,552 yuan per ton, with a price difference of 12,948 yuan per ton compared to the domestic price; the average export price for R134a was 41,344 yuan per ton, with a price difference of 4,281 yuan per ton compared to the domestic price; the average export price for the R125/R143 series was 28,571 yuan per ton, with a price difference of 16,179 yuan per ton compared to the domestic price. The Ministry of Ecology and Environment issued the national plan for China to fulfill the "Montreal Protocol on Substances that Deplete the Ozone Layer" (2025-2030) On April 23, 2025, the Ministry of Ecology and Environment released the "National Plan for China to Fulfill the (2025-2030)", with the main goals including: to reduce the baseline consumption of HCFCs in controlled uses by 67.5% and 73.2% in 2025, and by 97.5% in 2030, from the baseline production and consumption values of 2.91 million tons and 1.89 million tons of ozone-depleting potential respectively, while retaining 2.5% to meet the demand for refrigeration and air conditioning maintenance; to reduce the baseline production and consumption of HFCs in controlled uses by 10% in 2029, from the baseline production and consumption values of 18.53 million tons and 9.05 million tons of carbon dioxide equivalent (tCO2) respectively. Overall production in the second quarter of 2025 in the air conditioning sector continued to grow year on year In the first half of 2025, domestic production of air conditioners continued to increase, with production figures for January-February reflecting a passive reduction in exports, gradually picking up in March. In addition to seasonal stocking factors, the promotion of two new policies has also had a significant impact. Furthermore, as last year's government subsidies were introduced comprehensively during the off-peak season, and continued into this year, it is expected that some of the demand that was not stimulated last year will be catalyzed during the peak season of the second quarter. In terms of exports, according to customs data, China's cumulative exports of air conditioners in the first quarter amounted to 22.22 million units, an increase of 19.2% year on year. However, with the impact of the US-China tariff policies, the trend in the export production market began to shift in May, but the early pace of exports this year and the additional tariffs will have a minimal impact on the overall annual export figures. In terms of production, according to the Industrial Online Home Air Conditioning Domestic Production Report, production in May 2025 was 14.37 million units, up 15.4% year on year; in June, production was 13.61 million units, up 28.8% year on year; and in July, production was 12.65 million units, up 36.7% year on year. In terms of export production, in May 2025, 8.93 million units were produced for export, down 1.6% year on year; in June, 7.37 million units were produced for export, down 12.0% year on year; and in July, 5.77 million units were produced for export, down 16.7% year on year. Overall production in May increased by 9.9% year on year, in June by 14.1% year on year, and in July by 14.3% year on year.Chemical Industry NewsZhejiang Juhua: Released the annual report for 2024 and the first quarter report for 2025. The company achieved a net profit attributable to shareholders of 1.96 billion yuan in 2024, a year-on-year increase of 107.7%; Zhejiang Sanmei Chemical Industry: Released the annual report for 2024 and the first quarter report for 2025. The company achieved a net profit attributable to shareholders of 779 million yuan in 2024, a year-on-year increase of 178.4%; Zhejiang Yonghe Refrigerant: Released the annual report for 2024 and the first quarter report for 2025. The company achieved a net profit attributable to shareholders of 251 million yuan in 2024, a year-on-year increase of 36.8%; DONGYUE GROUP released the annual report for 2024. The company achieved a net profit attributable to shareholders of 811 million yuan for the full year 2024, a year-on-year increase of 14.6%.