Guosen Securities has released a research report indicating that there will be a reduction in compliance for second-generation refrigerants by 2026, while the third-generation refrigerant quota system will continue. The industry concentration for varieties like R22, R32, and R134a is high. The inter-varietal conversion ratio for third-generation refrigerants has increased year-on-year, enhancing production and allocation flexibility for companies. It is expected that the mainstream third-generation refrigerants will maintain a balance between supply and demand in 2026. The tightening of refrigerant quotas is a long-term trend, and against this backdrop, R32, R134a, and other mainstream refrigerants are likely to maintain favorable conditions, with considerable long-term price upside potential. Leading companies in the refrigerant quota market are expected to sustain high profitability over the long term. Furthermore, there is optimism regarding the rising demand for fluorinated liquids and refrigerants in the liquid cooling industry.
The primary viewpoints of Guosen Securities are as follows: The Ministry of Ecology and Environment released the total quota setting and allocation plan for refrigerants in 2026. They are optimistic about the continued buoyancy of refrigerant products. On October 24, 2025, the Ministry officially issued the “Total Quota Setting and Allocation Plan for Ozone-Depleting Substances in 2026” and the “Total Quota Setting and Allocation Plan for HFCs in 2026.” The plans adhere to principles of goal orientation, stability, phased implementation, and tailored strategies. The compliance tasks for the annual elimination of second-generation refrigerant quotas will be strictly enforced. The third-generation refrigerant quotas have undergone slight adjustments in allocation considering industry development needs and the implementation of HFC quotas for 2025, with the inter-varietal adjustment limit for 2026 raised from 10% to 30%.
Guosen Securities believes the seriousness of the quota policy will continue, maintaining a strong constraint on the supply side over the long term. The firm maintains a positive outlook on the continued buoyancy of refrigerant products.
For HCFCs: By 2026, production and usage will be reduced to 71.5% and 76.1% of baseline values respectively, with R22 production quotas decreased by 3,000 tons. According to the “Total Quota Setting and Allocation Plan for Ozone-Depleting Substances in 2026,” China's total HCFC production quota for 2026 is set at 151,400 tons, with internal usage production and usage quotas at 79,700 tons. The production and usage volumes of HCFCs in 2026 will be reduced to 71.5% and 76.1% of baseline values respectively. In terms of specific products, the production quotas for R22/Internal usage production quotas will each be reduced by 3,000/2,910 tons compared to 2025, decreasing by 2.01%/3.60% on a year-on-year basis; production quotas for R141b/Internal usage production quotas will be zeroed out. The reductions for R22 and R141b quotas are relatively significant, which may improve the supply-demand structure for R22.
Forecasting for R22, the production quota distribution for 2026 is approximately as follows: Dongyue Group 43,000 tons, Juhua Co., Ltd. 38,100 tons, Meilan Chemical 30,200 tons, Arkema 8,600 tons, and Sanmei Co., Ltd. 7,700 tons.
For HFCs: Based on the 2025 quotas and two annual adjustment opportunities, the inter-varietal adjustment ratio cannot exceed 30%. The Ministry has added 3,000 tons of R245fa production quotas (with 3,000 tons for internal use) and 50 tons of R41 quotas (with 50 tons for internal use) in accordance with the demand for replacements of HCFCs and growth demands from the semiconductor industry for R41, while other varieties’ quotas remain consistent with 2025 levels.
Quota adjustments are divided into intra-varietal adjustments and inter-varietal adjustments. The same variety quotas can be adjusted equally across different production units; inter-varietal adjustments must satisfy (1) no increase in total CO2 equivalent and (2) the cumulative increase of adjusted amounts does not exceed 30% of the distributed quotas’ amount, which is a slight increase from last year’s ratio of 10%. The adjustment opportunities remain at two per year, with adjustment deadlines by April 30 and August 31. Without changes to the restrictions of the quota system, production enterprises can adjust production more flexibly according to actual supply and demand. Due to the nature of inter-varietal quota adjustments, companies with a complete range of products and higher quota volumes possess stronger adjustment flexibility.
As R22 prices stabilize after a decline, the buoyancy of mainstream third-generation refrigerants such as R32 and R134a continues. With R22 gradually entering the off-season for demand and repair demand diminishing after the old-for-new air conditioning initiative, a surplus of R22 quotas is anticipated, and companies may lower prices to clear inventories. According to Zhichuang Information, the average price of R22 fell to 34,100 RMB/ton in Q3 2025, down by 429 RMB/ton from Q2; as per Fluorine Online, R22 prices dropped to 15,000-18,000 RMB/ton this October, with low-price strategies spurring improved market purchasing sentiments, resulting in smoother shipments. Following this, prices are expected to increase and stabilize at 18,000-20,000 RMB/ton.
R32 has performed strongly amidst sustained demand growth, with refrigerant companies showing strong willingness to maintain the R32 market, leading to steady price increases. The average price reached 59,000 RMB/ton in Q3 2025, up by 8,534 RMB/ton compared to Q2, with current mainstream transaction prices staying between 61,000-62,000 RMB/ton. R134a prices are on the rise due to continued consumption of quotas, with an average price of 51,000 RMB/ton in Q3 2025, increasing by 3,360 RMB/ton compared to Q2; current quotes are gradually increasing to 53,000 RMB/ton. R410a prices have also risen, reaching 51,000 RMB/ton in Q3 2025, up by 2,830 RMB/ton from Q2, with current quotes rising to 52,000-55,000 RMB/ton. Prices for R125, R143a, and R507 have remained stable at 46,000 RMB/ton throughout the second and third quarters as well as currently.
On the subject of investment, it is advisable to pay attention to leading fluorochemical companies with complete supply chains, well-established infrastructure, leading refrigerant quotas, and advanced technology. Relevant stocks include Juhua Co., Ltd. (600610.SH), Dongyue Group (00189), and Sanmei Co., Ltd. (603379.SH).
Risk Warning: Demand for fluorochemical products may fall short of expectations; policy risks (tighter environmental regulations on fluorinated refrigerants, rapid upgrade processes, changes in quota distribution policies, etc.); global trade tensions and export barriers; sluggish real estate cycle; companies' project production schedules may not meet expectations; rising raw material prices; chemical safety production risks, etc.