Guosen Securities has released a research report stating that with the phase-out commitment for second-generation refrigerants in 2026 and the continuation of the third-generation refrigerant quota system, industry concentration for products like R32, R134a, and R125 remains high. The report notes a year-on-year increase in the conversion ratios among third-generation refrigerant varieties, enhancing production flexibility for companies. It is anticipated that the mainstream third-generation refrigerants will maintain a tight supply-demand balance in 2026.

The report posits that the tightening of refrigerant quota constraints is a long-term trend. Against this backdrop, the firm is optimistic about the sustained favorable conditions for mainstream refrigerants like R32, R134a, and R125, with significant long-term upside potential for prices. Leading companies with substantial refrigerant quotas are expected to maintain high profitability levels over the long term.

Additionally, the report is bullish on the rising demand for fluorinated electronic materials within the broader semiconductor sector. It suggests focusing on products experiencing volume and price increases, such as electronic-grade PTFE, ultra-pure PFA, electronic-grade hydrofluoric acid, fluorinated electronic specialty gases, and fluorinated fluids.

The report recommends attention to leading fluorochemical enterprises and upstream resource leaders that possess complete industry chains, comprehensive infrastructure, leading refrigerant quotas, and advanced process technologies.

Review of the Fluorochemical Market in June

As of the end of June (June 30th), the Shanghai Composite Index stood at 4094 points, up 0.63% from the end of May. The CSI 300 Index was at 4979 points, a 1.78% increase. The Shenwan Chemical Industry Index reached 4766, rising 4.88%, while the Fluorochemical Index hit 2308 points, surging 15.56%.

In June, the Fluorochemical Industry Index outperformed the Shenwan Chemical Industry Index by 10.68 percentage points, the CSI 300 Index by 13.78 percentage points, and the Shanghai Composite Index by 14.93 percentage points.

According to the Guosen Chemical Price Index compiled by the firm, as of June 30, 2026, the Guosen Chemical Fluorochemical Price Index and the Guosen Chemical Refrigerant Price Index were at 1405.2 and 2148.98 points, respectively, representing changes of -0.81% and +2.35% from the end of May. In June, anhydrous hydrofluoric acid, PTFE, and FEP saw varying degrees of price declines, while some refrigerants and polymers like R22, R134a, and R143a experienced increases to varying extents.

Mainstream Refrigerant Prices Continue to Rise

According to industry sources, as of July 3, 2026, R22 prices have risen to 24,000-25,000 RMB per ton. R32 is quoted at 63,000-65,000 RMB per ton. At the end of June, domestic refrigerant companies quoted R32 to air conditioning manufacturers at 65,000 RMB per ton for cash payment and 65,600 RMB per ton for acceptance payment, representing a quarterly increase of 2,800 RMB per ton. Prices for R410a, R404, and R507 remained at 59,500, 53,000, and 53,000 RMB per ton, respectively. The third-quarter contract offer for R410a is 60,000 RMB per ton cash and 60,500 RMB per ton on acceptance. R134a prices have risen to 64,000-65,000 RMB per ton.

Adjustments in Third-Generation Refrigerant Phase-Out Timelines by the UK and US Benefit Chinese Exports

Recent reports indicate the UK has postponed its "stricter" HFCs phase-out plan, and the UK's largest refrigerant wholesaler has raised prices for products like R410a and R407c. The US Environmental Protection Agency finalized revisions to the "2023 Technology Transition Rule" on May 21, extending the compliance use period for HFC refrigerants and relaxing related usage restrictions, allowing companies to choose more cost-effective refrigerant products.

The recent adjustments by the UK and US to their third-generation refrigerant phase-out schedules do not negate the Kigali Amendment but rather correct previous overly aggressive and steep domestic policies. The core implication is that while third-generation refrigerants remain subject to long-term restrictions overall, their practical service life and maintenance replacement cycles in developed countries are lengthening, significantly slowing the near-to-medium-term demand decline.

As a major global supplier of refrigerants, China's certainty in exports, inventory replenishment, and pricing power has increased.

European Heatwave Boosts Air Conditioning Segment Demand

Production schedules in January-February 2026 were affected by the Chinese New Year holiday. March-April domestic production for household air conditioners showed resilience, supported by installation demand linked to property completions, with industry fundamentals remaining solid, showing only a slight year-on-year decline against a high base from the previous year and rising raw material costs.

In May, air conditioning production plans were adjusted downward under pressure from costs and inventory. In June, driven by the "618" shopping festival, terminal sales improved compared to expectations but still showed a significant gap compared to the same period last year. July production schedules indicate a slight increase, mainly due to inventory replenishment needs for some brands.

On the export front, customs data shows China's cumulative air conditioner exports from January to May 2026 were 34.03 million units, down 6.7% year-on-year. The export market has been on a downward trend since May 2025, with a high base from the same period last year and inventory pressure from earlier front-loaded exports leading to eight consecutive months of year-on-year decline.

Following the overseas Christmas season, a regular restocking cycle began. January-February 2026 saw divergence due to the Chinese New Year. The impact of the holiday faded in March, with the decline in export production narrowing rapidly. However, due to a high base formed by concentrated overseas restocking in 2025 and increased transportation costs affected by the Middle East conflict, export production from March to June still declined year-on-year.

Nevertheless, high temperatures in the European market have activated segment-specific demand, driving a counter-trend surge in mobile air conditioners.

For domestic production scheduling, industry data indicates 8.78 million units scheduled for July 2026, down 17.0% year-on-year. For export production scheduling, 5.17 million units are scheduled for July 2026, down 11.7% year-on-year.

Focus on Rapid Demand Growth for Fluorinated Electronic Materials Driven by AI

High-end fluoropolymers: (1) PTFE: Nvidia has initiated M10 CCL material testing for its Rubin Ultra. AI servers handle massive signal transmission for computing power, and the M10 system upgrade places higher demands on material dielectric constant and dielectric loss. PTFE, with a dielectric constant as low as 2.0-2.1 and dielectric loss as low as 10-4 to 10-5, offers excellent dielectric performance advantages in high-frequency millimeter-wave scenarios, making it one of the candidate resin solutions for the M10 system.

(2) PFA: Ultra-pure PFA has long been monopolized by overseas suppliers and is widely used in key semiconductor processes such as wafer cleaning, etching pipelines, and high-purity reagent delivery. In early May, Juhua Co., Ltd.'s subsidiary, Jusheng Fluorochemicals, successfully completed the first shipment of qualified ultra-pure PFA products, officially launching them to the market. Additionally, Shaowu Yonghe's high-purity PFA project entered trial production in October 2025, with related process verification and performance optimization work progressing orderly.

Electronic-grade hydrofluoric acid: Anhydrous hydrofluoric acid is the main raw material for producing electronic-grade hydrofluoric acid. The Middle East conflict has affected the supply of sulfur, a raw material for hydrofluoric acid, leading to shortages. Reports from July 1st indicate that industry sources say TSMC, Samsung, and SK Hynix are all scrambling to purchase electronic-grade hydrofluoric acid. Rising raw material prices have increased the cost base for electronic-grade hydrofluoric acid, and some suppliers have successively raised prices by approximately 20-30%.

Furthermore, BOE (Buffered Oxide Etchant) is a mixture of hydrofluoric acid and ammonium fluoride, making the etching process more stable and controllable.

Fluorinated specialty gases: South Korea's Samsung Electronics and SK Hynix are entering a new round of significant capital expenditure, which benefits upstream demand for electronic materials. Additionally, due to advanced nodes in computing chips, HBM, 3D NAND, and multi-layer stacking increasing gas consumption per wafer, the growth in demand for electronic gases will create a multiplier effect from wafer capacity expansion and increased unit gas consumption.

Fluorinated specialty gases like hexafluorobutadiene can improve etching precision and efficiency, required for advanced memory etching; tungsten hexafluoride is used for vapor deposition of tungsten conductor films in advanced logic, DRAM, and 3D NAND.

Fluorinated cooling fluids: With the development of AI technology, server power density has significantly increased. Traditional air cooling has reached its limits. Liquid cooling technology can effectively reduce data center PUE, with immersion and dual-phase cold plate liquid cooling becoming future trends, driving rapid growth in demand for upstream fluorinated fluids and refrigerants.

Key Fluorochemical Industry News This Month

Yonghe Co., Ltd.'s net profit for the first half of 2026 increased 70%-103% year-on-year; Yonghe Co., Ltd. plans to invest 1.914 billion RMB to construct a high-end fluoromaterial and pilot base project; Yonghe Co., Ltd. acquires PVDF capacity from Do-Fluoride; Sanmei Co., Ltd. expands into wet electronic chemicals; Juhua Co., Ltd. achieves mass production of high-purity PFA, targeting the high-end semiconductor market.

Risk Factors

Fluorochemical product demand falling short of expectations; policy risks (tightening environmental policies for fluorinated refrigerants, accelerated upgrade and replacement processes, changes in quota allocation policies, etc.); global trade friction and export obstacles; downturn in the real estate cycle; slower-than-expected project commissioning progress for various companies; rising raw material prices; chemical production safety risks.