Chemicals – Sector Update – End of road for high R32 prices?
Published on 04 Sep 2025
As a result of the ongoing subsidy led consumer goods trade-in program in China, domestic sale of ACs in China has grown at 9.4% YoY in Aug-Dec’24 vs 0.8% during Jan-Jul’24. In Jan-Jul’25 also, we have seen 9.9% YoY growth in domestic sale of ACs. We believe that strong prices of R32 are also partly due to this growth in sales. Our estimate suggests that new ACs bought post 2019 account for 68% of the total existing stock and are unlikely to be replaced so soon even if they are less efficient. Even if the momentum continues for the rest of 2025, this composition would rise to ~73% by 2025-end, putting a question mark on continuation of the subsidy led trade-in beyond 2025. From export realizations, we see that price of R32 has risen from USD3.9/kg in H2CY24 to USD4.6/kg in Q1CY25 and to USD6.5/kg in Q2CY25, the high growth coinciding with the consumer goods trade-in boost. This is unlikely to sustain, bringing down R32 prices.
