HFC Shortage Looms Because of Producers' Fears

26 April 1999 00:00  [Source: ICB Americas]

Elf Atochem is presently ruling out building new capacity to meet shortages of hydrofluorocarbon (HFC) 134a because of concerns about new regulations on the chemical.

Fluorocarbon producers warn that Europe will face shortages of HFC-134a this spring and summer. The scarcity will be even worse next year, as demand rises to levels well beyond supplies.

Atochem, one of the world's leading fluor- ocarbon manufacturers, will not invest in new capacity even though it predicts substantial price increases next year.

"We will do some debottlenecking amounting to a few thousand tons," says Jean-Bernard Lartigue, Atochem's vice-president responsible for fluorochemicals. "Right now, we have no plans for new capacity. We have learned from our experience with chlorofluorocarbons (CFCs) that you cannot trust the regulators. At a time of global warming measures, we do not know what the politicians might do."

HFCs are one of the six gases covered by the Kyoto treaty on climate change, even though they account for less than 2 percent of emissions of global warming gases. Denmark is considering banning HFCs as refrigerants, and other European Union states are considering restrictions.

Atochem calculates that in 1999 global demand for HFCs will be roughly the same as operational capacity of 120,000 tons per year. But with consumption in the refrigeration and air-conditioning markets growing at a 15 to 20 percent annual clip, demand will outstrip supplies next year because of lack of new capacity.

The company has an HFC capacity of roughly 30,000 tons per year. The global market leader, ICI is also not planning to build new capacity, mainly because it regards HFC prices as too low.

European HFC-134a prices are currently around 5 euros ($5.50) per kilo, an increase of about two-thirds since last year, due mainly to more effective curbs on the blackmarket trade in CFCs.

"Seasonal shortages are also pushing prices up," says Mr. Lartigue. "Next year there will be shortages throughout the year."

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