Global Market Update – Strong Growth of “Natural” Refrigerants

Natural Refrigerants Surge

A new report published by Zion Research shows strong growth of “natural” refrigerants. The report shows a potential surge from USD 750.2 Million in 2014 to USD 1,418.20 Million by 2020.

Natural refrigerants are the best alternatives used for fluorocarbon refrigerants. Growing awareness about global warming and other environmental issues created due to the synthetic refrigerants like fluorocarbon has overcome by the use of natural refrigerants.

For more information please read this full article posted in EconoTimes

 

Are Your Customers Really Getting $6.00/lb. for Their Recovered R-22?

A Market Study in R-22 Refrigerant Recovery

Recently, our wholesale partners have been asking us how a reclaimer can offer their customers $6.00 per pound for recovered R-22.  The answer is found in the details of competing reclamation programs, transaction costs and an analysis of the refrigerant recovery market.

Payment Schedules

DynaCycle’s payment schedule has the broadest tier-one purity level (97%-100%) in the industry and pays on purity-levels as low as 90%.

 

Three reclaimers are offering the $6.00 per pound buyback program at this time.  Their average purity-level to get a $6.00 payment is 99.5% and above.  In addition, they charge a shrinkage fee (5-10%) to account for the lubricants and other impurities, which further reduces the amount paid.  Here is an average of several payment schedules from competing reclaimers.  This payment schedule illustrates how quickly rates can drop when purity-levels go below 99.5%.

99.5-100%                 $6.00 (net $5.40 with 10% shrinkage fee)

99.0-99.4%                $4.00 (net $3.60 with 10% shrinkage fee)

98.5-98.9%                $2.00 (net $1.80 with 10% shrinkage fee)

98.0-98.4%                $1.00 (net $0.90 with 10% shrinkage fee)

Transaction Costs

While reclaimers will accept 50# cylinders, most prefer to have the gas delivered in 120, 240 or 1000 pound cylinders.  This requires the contractor to transfer gas at their shops and then prepare the cylinders for delivery.  The more gas that is transferred, the better the opportunity for diluting the refrigerant and driving down purity levels.

 

We did a quick study on the locations we visited that transferred their recovered R-22 into larger cylinders.  We found that half of the tanks contained gas that was 97% pure while the other half was either mixed gas or less than 97% pure.  Utilizing the payment schedule above, half of the transfer tanks would have no payment value.  Conversely, the DynaCycle 50 lb. cylinders yield an average of 84% tier-1 and 11% tier-2 R-22 refrigerant (The remaining 5% is other refrigerants and mixed gas). That means you and your customer can get paid 95% of the time.

Market Conditions

Over the last year, we sampled hundreds of thousands of pounds of recovered R-22 that came in to our program.  We found that the average purity level was 98.53%, and it has been falling throughout 2012 as the price of R-22 has increased.  There has been an increase in the number of commercial system owners reusing the R-22 that is recovered during maintenance, instead of replacing it.  R-22 that is recovered from larger commercial systems acts as a source of high-purity R-22 that increases the overall average purity-levels of recovered R-22.  Should this trend continue (and we think it will) the average purity of recovered gas will fall below 98% in the near future.

Competitive Analysis

Back to the original question…How much will your customer actually get paid for the gas they ship off to the reclaimers offering $6.00 per pound.  It is impossible to say exactly for each of your customers.  What we do know is that the average purity-level for recovered R-22 is 98.53% which yields a payment of $1.80 to $1.90 per pound ($2.00 less the 5-10% shrinkage fee).

 

So is the competition’s $6.00 figure false advertising? No.  Those programs inform the market about their purity-based payment schedule. What they don’t tell your customers is that the average of R-22 reclaimed is 98.53% pure.

 

Some may say that their average is higher than our survey. That is possible. However, logic would dictate that the difference is very small. The average purity-level of recovered R-22 does fluctuate.  Our numbers show that this average is driven by the cost of R-22.  The higher the cost, the lower the purity level of recovered R-22.

 

The DynaCycle Advantage

DynaCycle’s advantage comes from a competitive payment schedule that is properly aligned with market conditions, and an innovative, lightweight 50 lb. composite recovery cylinder.  Here are some other advantages you can share with your customer:

 

84% of the total gas on the DynaCycle program is tier one (97-100%) Which means they would receive 28% of the Market Price or $3.36 per pound vs. an average of less than $1.90 (remember the shrinkage fee) with the other programs.

 

You offer convenient wholesale branch drop-off locations so your customers don’t need to transfer gas in their shop and ship their recovered R-22 to a distant location.

 

Using the lightweight DynaCycle cylinder yields twice as much gas per cylinder than a steel cylinder.

 

The unique design of the DynaCycle cylinder makes recovering R-22 faster easier than a steel cylinder.

 

You always get your own cylinder back from your wholesaler.

 

Your customers do not have to use their credits to buy R-22.  They can use the money from their efforts to purchase anything they need for their business.

 

Your customers have 100% of their EPA paperwork done at no charge under the DynaCycle program.

 

Your customers are welcome to watch the testing of their R-22 before we pump down their cylinders and buy their recovered refrigerant.

Europe Revokes HFO-1234yf Patent

A tribunal of the European Patent Office (EPO) heard oral arguments in March of this year after formal objections to Honeywell’s HFO-1234YF patent were filed by Daikin Industries, Daimler AGE, ACEA, BMW AG, Mexichem, Solvay Fluor and others in November of 2009.  The tribunal’s decision is as follows-
“The patent is revoked under Article 101(2) EPC as at least one of the grounds of oppositions prejudices its maintenance unamended, and under Article 101(3) (b) EPC because taking into account the amendments made by the proprietor during the opposition proceedings, the patent and the invention to which it relates do no meet the requirements of the EPC.”
(European Patent Convention)
Honeywell has filed a Notice of Appeal.

Global Demand for Flourochemicals to Increase

3.9%  Increase  Annually  Through  2016

Worldwide  demand  for  flourine-­containing  chemicals  is  expected  to increase  3.9%  annually  to  3.5  million  metric  tons  in  2016.    This  information was  released  by  Reportlinker.com  and  reported  on  by  AZoM.

Growing  production  of  refrigeration  and  cooling  equipment  is  driving  the numbers.    HCFC  demand  will  fall  through  2016,  while  HFCs  will  continue strong  growth  as  a  replacement  to  HCFCs.  Forecasts  show  the  largest market  growth  in  the  Asia-­Pacific  region  with  smaller  Africa  -­  Mideast  and Eastern  European  markets  showing  above-­average  gains.

This  report  uncovered  several  challenges  to  flouro  chemical  production. China  is  a  major  exporter  of  fluorospar  and  has  been  restricting  exports  of this  key  raw  material.    As  those  of  us  in  the  HVAC/R  industry  well  know, the  unstable  regulatory  environment  makes  supply  and  demand  a  bit unpredictable.    There  is  also  a  growing  market  for  alternatives  to  flouro-­ chemical  use  in  the  commercial  refrigeration  market  and  blowing  agents market.

The full article may be found by clicking Here.
AZoM, July 6, 2012, Cameron Chai