R125 Shortage is Here

May 18, 2010
R125 is used to make a variety of comfort and commercial refrigeration refrigerants.

Most refrigerant related discussions over the past few years have been related to the phase-out of R22 and the increased demand for its replacement, R410A. But since the middle of summer 2009, the unexpected shortage of another fluorocarbon — R125 —has been rattling the refrigerant demand chain.

R125 (HFC-125) is a fluorocarbon essential in generating new refrigerants for the non-ozone-depleting HFC refrigerants R410A, 402A, 402B, 404A, 407A, 407C, 408A, and 507.

Sources from DuPont say the shortage of R125 is based on five factors:
• Global demand for HFC blends has increased significantly in 2010 due to the U.S. phaseout of R22 in new equipment resulting in increased R410A demand,
• increased demand for new equipment as the global economy recovers from the recession, and
• the European F-Gas regulation, which bans the use of virgin R-22 for new equipment and service in Europe.
• Reduced feedstock supplies (especially chlorocarbons in China) have constrained global supplies of fluorocarbons including HFC-125 - and, feedstock prices have increased dramatically.
• global demand for HFC-134a has increased as a result of major conversion from HCFC's in insulating foams. This also impacts HFC-125 supply since much of the world’s HFC-125 capacity is in "swing plants" that are also used to produce HFC-134a.

The EPA Final Rule reduced R22 by over 150 million pounds in 2010 and 10-13% per year thru 2014. According to the EPA, the phase-out results in 27.5 million pound shortfall versus expected service demand. DuPont urges early action by contractors to differentiate them from their competition by offering affordable solutions to their customers.

DuPont sources recommend that dealers, service contractors and equipment owners implement a refrigerant management plan to transition away from R22. A refrigerant management plan should include: repair all leaks; recover and reclaim; retrofit existing equipment to alternative refrigerants (theirs is ISCEON® MO99™); and as needed, new equipment with non-ozone depleting refrigerants such as DuPont™’s SUVA® 410A. MO99 is DuPont’s Quick Switch to replace R22 and is mineral oil compatible.

Refrigerant 4-1-1 asked some industry refrigerant leaders to comment on the shortage. John Mandyck, vice president of sustainability and environmental strategies for Carrier Corp., (makers of Puron® refrigerant) says Carrier is monitoring the situation closely, and is looking for solutions.

“Carrier works closely with our refrigerant suppliers to understand and resolve any issues that might affect our customers,” Mandyck says, and adds that Carrier is closely monitoring raw material price increases and consolidation of producers in the refrigerant industry. “China is the largest producer of fluorspar; we understand that there are steps to control the production and export of that product,” he says.

Mandyck says, that while supplies of Carrier’s Puron® refrigerant have been affected by several concurrent market forces, including high demand, the company is confident there will be sufficient R125 to meet current needs.

“We continue to monitor the supply situation carefully, especially in Asia. In the U.S., the robust demand is driven by the conversion of R22 equipment and strong demand for R410A,” Mandyck says.

Carrier’s main message to HVACR contractors is that the company is working together with its suppliers to ensure that customers’ refrigerant needs will be met. “We don’t foresee significant issues at this point. We expect the tightness in the raw materials chain and short-term capacity issues related to R125 to normalize toward the end of the year, when additional R-125 production capacity is expected to be in place,” Mandyck says.

Bill Bergamini, president of HVACR distributor ILLCO, Inc., Countryside, IL, says he’s seeing the R125 shortage having a bigger impact on R404A and 507, the major supermarket refrigerants, than on R410A.

“That’s a problem even larger than R410 demand for us,” he says. “Product lead times have been greatly affected. That’s where our biggest issue lies. The best advice is for contractors to plan way ahead, perhaps much further ahead than they’ve ever had to. Determine your needs, and try to get orders placed to lock in pricing, because we’re seeing prices skyrocket. For example, if a contractor is to place an order today, we can then place orders with the manufacturers and lock in current pricing for that quantity. The lead times are then the issues.

Bergamini says there’s no clue as to where prices could reach by mid-summer, but he expects there to be some measure of pricing uniformity, since all suppliers are facing the same availability issues.
“R410A is now off-patent, which means there will be an increased number of “producers” blending and packaging the product, but the R125 shortage remains the sticking point for all formulators,” he says.

Bergamini adds that it’s ironic how the R125 shortage has hindered stabilization of R410A prices, which was hoped for as the industry worked its way through the first year of a “post-R22 world.”

“If we didn’t have this R125 shortage, we would be seeing prices on 410A coming down,” he says. “It’s the opposite of what we thought would be happening.”

So again, for HVACR contractors, the best advice is to plan and buy in advance.

“I think the product will be available with extended lead times; what we don’t know is if lead times will grow longer, and what the price will be next month or two months from now. So, if a contractor has a project he knows will start in a month or so, he should buy the refrigerant now to lock in the price and plan for extended lead times,” advises Bergamini.

Indications of a possible support for supply chain came from sources inside Arkema and Daikin in early May: the two formulators have cut the ribbon on a shared production facility in Changshu, China.

“The startup of production in ADAF meet the needs of the increasing demand [for R125] and we’re confident that the air conditioning manufacturers and other customers will feel assured of their supply chain” says Guntaro Kawamura, senior executive officer, director, and board member, Daikin Industries, Ltd.

“The startup of the Changshu R125 plant falls in line with our strategy to serve our customers in Asia, a growth region in which China is a major player in the manufacture of air-conditioning equipment. Following the launch of R32 in the United States in 2007, this latest development confirms Arkema's commitment to investing in the production of new generation components poised to replace HCFCs,” says Pierre Chanoine, Group President of Arkema's fluorochemicals business unit.

Additionally, DuPont has announced its intent to acquire a minority share in Changshu 3F of China, pending completion of definitive agreements and approval by the Chinese government.

“Zhonghao’s world-class fluorochemical manufacturing capabilities will strengthen our ability to better serve our customers worldwide. It also will enable a faster response to rapidly growing regional markets for our broad portfolio of fluorochemicals across all applications. This applies for existing and future chemistries for refrigerants or for our specialty fluorochemicals markets,” says Gary W. Spitzer, president, DuPont Chemicals & Fluoroproducts.