In India the domestic market will have healthy demand for refrigerants, and the prices of refrigerants will rise. Demand for air conditioners from the automobile industry and households is rising, resulting in increasing demand for refrigerants.
In the near term, the prices of HFCs will remain elevated due to strong demand in the Chinese market. In the medium term, the prices are expected to increase due to the phase-down in HFC production/consumption. HFC production was constrained by the non-availability of AHF, a key raw material. Recently, the companies have added AHF capacity; thus, HFC plants are expected to run at optimum capacity.
Historically, it has been observed that the price of refrigerant gases rises whenever there is a phase-down in production/consumption and the quota regime begins. This time is also not an aberration, and expects the price of HFCs to increase. Recently, refrigerant gas prices in China have increased due to
(1) a pickup in domestic demand,
(2) HFC production cuts in China as per the Kigali agreement,
(3) gradual depletion of refgas inventory that was built up
This has led to a rise in refrigerant gas prices globally, as Chinese manufacturers drive the price for refrigerant gases. The pickup in demand in the Chinese market has resulted in a reduction in dumping in other markets. This has resulted in higher realization for Indian refgas manufacturers in both the export and domestic markets.
Domestic demand for air conditioners is rising and is expected to reach about 15-16 million per annum this year, with an expectation to reach 30 million per annum in two years based on the capacities announced by the OEMs.
Currently, the secondary market is 40-50% and is expected to reach 70%, after which it will be a secondary market. Demand for air conditioners from households are rising with the increase in per capita income.
Air conditioners will no longer be a luxury, but rather a necessity.
