Guosen: Refrigerant prices continue to rise, fluorine chemical companies' performance increases significantly.

Guosen released a research report stating that by 2026, the compliance reduction of the second-generation refrigerants will be implemented, while the quota system for third-generation refrigerants will continue. High industry concentration is observed in varieties such as R32, R134a, and R125. The conversion ratio between third-generation refrigerant varieties is expected to increase year-on-year, leading to improved flexibility in production and allocation by enterprises. It is predicted that the mainstream third-generation refrigerants will maintain a tight supply-demand balance by 2026. The bank believes that the tightening of refrigerant quotas is a long-term trend, and in this context, it is optimistic about the continued prosperity of mainstream refrigerants such as R32, R134a, and R125, with significant upward price potential in the long term. Leading companies in refrigerant quotas are expected to maintain a high level of long-term profitability. In addition, there is optimism regarding the increase in demand for fluorinated liquids and refrigerants in the liquid cooling industry. The bank recommends paying attention to the price recovery of fluorine-containing high-molecular-weight polymers such as PVDF and PTFE. It also suggests focusing on fluorine chemical industry leading enterprises with complete industrial chains, complete infrastructure, leading refrigerant quotas, and advanced technology. Highlights from Guosen: April Fluorine Chemical Market Review As of the end of April (April 30), the Shanghai Composite Index was at 4112.16 points, up 5.66% from the end of March; the Shanghai and Shenzhen 300 Index was at 4807.31 points, up 8.03% from the end of March; the Shanghai Stock Exchange Chemical Industry Index was at 4989.33, up 6.74% from the end of March; and the Fluorine Chemical Index was at 2070.20 points, up 6.59% from the end of March. In April, the Fluorine Chemical Industry Index lagged behind the Shanghai Stock Exchange Chemical Industry Index by 0.2 percentage points, underperformed the Shanghai and Shenzhen 300 Index by 1.4 percentage points, but outperformed the Shanghai Composite Index by 0.9 percentage points. According to the bank's compiled Guosen Chemical Industry Price Index, as of April 29, 2026, the Guosen Chemical Industry Fluorine Chemical Price Index and the Guosen Chemical Industry Refrigerant Price Index were 1427.84 and 2084.86 points, respectively, up by 5.60% and 2.67% compared to the end of March. In April, the prices of anhydrous hydrofluoric acid, trichloroethylene, some refrigerants, and polymers all rose to varying degrees. R32, R125, R134a, R410a Long-term Contracts and Prices Rise According to Fluorine Online and Sublime China Information, as of April 30, 2026, the price of R22 rose to 19,500-20,500 yuan per ton. The price of R32 rose to 65,500-66,000 yuan per ton. The price of R125 rose to 55,000-60,000 yuan per ton; R410a/R404/R507 followed the increase to 59,500/52,500/52,500 yuan. The price of R134a rose to 61,000-63,000 yuan per ton. End-demand pressured, slight year-on-year decline in May air conditioning production In the first quarter of 2026, production was affected by the Spring Festival holiday. The domestic production of household air conditioners in March-April demonstrated strong resilience, with the demand driven by new building completion. The industry fundamentals remain supportive, with only a slight year-on-year decline in the context of high base numbers last year and continuous rise in raw material costs. In May, air conditioning production plans were narrowed under various pressures such as costs and inventory; it is expected that the strong demand for air conditioners will continue to increase in the peak season under the background of the strengthening El Nio phenomenon causing extreme weather globally. As for exports, according to customs data, from January to March 2026, China exported a total of 20.52 million air conditioners, a year-on-year decrease of 7.7%. In the first two months of 2026, domestic production showed differentiation due to the Chinese New Year holiday. With the end of the Chinese New Year holiday in March, production decline in exports rapidly narrowed, but due to the higher base number formed by overseas concentrated restocking in 2025, coupled with the impact of the Middle East war on transportation costs, exports continued to decline year-on-year from March to May. In terms of domestic production, according to industry reports, air conditioner production in May 2026 was 12.855 million units, down 9.0% year-on-year; as for exports, air conditioner production in May 2026 was 7.42 million units, down 6.2% year-on-year. Focus on rising prices of fluorinated polymers in the background of cost support and supply-demand improvement (1)Short-term cost of PTFE remains strong, with steady increase in raw material prices, pushing up production costs for enterprises, providing solid support for market price increases. As of April 29, 2026, the prices were 50,000-52,000 yuan per ton for suspension medium particles, 52,000-53,000 yuan per ton for suspension fine powder, 50,000-54,000 yuan per ton for dispersion resin, and 30,000-32,000 yuan per ton for dispersion emulsion. (2)The PVDF market is overall stable, with recent plans for the resumption of production by Sanmei creating some disruption in the market landscape. In terms of different categories, the prices of paint-grade and product-grade PVDF fluctuate significantly, while lithium-grade PVDF remains stable and continues to be steady. As of April 29, 2026, the prices were 58,000-62,000 yuan per ton for paint-grade PVDF, 60,000-63,000 yuan per ton for product-grade PVDF, and 57,000-65,000 yuan per ton for lithium-grade PVDF. (3)FEP benefits from supply constraints and cost support, with steady release of downstream rigid demand, leading to a steady increase in prices along the industry chain. Currently, enterprise prices remain stable at high levels, gradually moving closer to offer prices. As of April 29, 2026, the prices were 58,000-60,000 yuan per ton for extrusion materials, 70,000-73,000 yuan per ton for molded material, and 81,000-98,000 yuan per ton for high-end products. This Month's Fluorine Chemical News Zhejiang Juhua's net profit attributable to shareholders in 2025 was 3.78 billion yuan, up 94% year-on-year; net profit attributable in the first quarter of 2026 was 1.17 billion yuan, up 46% year-on-year; Zhejiang Sanmei Chemical Industry's net profit attributable to shareholders in 2025 was 2.06 billion yuan, up 165% year-on-year; net profit attributable in the first quarter of 2026 was 500 million yuan, up 26% year-on-year; Zhejiang Yonghe Refrigerant's net profit attributable to shareholders in 2025 was 560 million yuan, up 123% year-on-year; net profit attributable in the first quarter of 2026 was 180 million yuan, up 85% year-on-year; DONGYUE GROUP's net profit in 2025 increased by 102.49% year-on-year; Ministry of Ecology and Environment: Plans to ban the production of HCFC-22 multi-split air conditioner units starting in 2027. Risk Warning: Fluorine chemical product demand falls below expectations; Policy risks (strictening environmental policies on fluorine refrigerants, accelerated upgrading and replacement processes, changes in quota distribution policies, etc.); Global trade frictions and export obstacles; Depressed real estate cycle prosperity; Slow progress in various companies' project investments; Rising raw material prices; Chemical production safety risks, etc.