25 September 2000 00:00 [Source: ICB Americas]By Ivan Lerner
Customers and distributors warn that refrigerant blends containing hydrofluorocarbon-125 may become tight in the next few months. A distributor says there could even be a severe shortage. He notes that as the industry grows, its demand increases. "This past year was a little tight, and several of the manufacturers of the blends had some delays in shipments because HFC-125 was tight," he adds.
Yet other analysts are more confident. "[Manufacturers] are not going to worry about supply," says Barry Friedfeld, senior analyst at the Little Falls, N.J.-based consultancy Kline & Co. "They are going to expect someone to build capacity to meet demand. If there was a supply disruption, it would only be short-term. It would not [be for] the long-term."
"Even if there [are] shortages, it's very hard to determine how prices will be affected," says Jay Kestenbaum, president of Long Island City, N.Y.-based distributor Refron Inc.
"In the chemical industry, traditionally when there are shortages, prices go up. But if you are someone who is trying to drive the market toward a new product, if you raise the price too much, you may have a whiplash effect [with customers questioning the necessity of change]."
HFC-125 is an alternative blend that the Menlo Park, Calif.-based consultancy SRI International expects to be used increasingly, especially in stationary air-conditioning and retail food store refrigeration.
Honeywell International Inc. is doubling production to meet the increasing demand for its line of Genetron refrigerants, driven by the continuing global use of refrigerant blends containing HFC-125.
However, the company has pushed back a doubling of the fluorocarbon capacity of its plant in Geismar, La., from the end of this year until the first half of 2002. Honeywell's expansion was scheduled to occur in two phases. The first, completed in the third quarter of 1999, raised the site's capacity by 25 percent.
Under the Montreal Protocol, chlorofluorocarbons (CFCs) were phased out in developed countries in 1995. The use of hydrochlorofluorocarbons (HCFCs), also regulated by the international agreement, will be reduced in the US, starting in 2003. HFCs, which do not contain chlorine and are considered not harmful to the ozone layer, are the leading substitutes for CFCs and HCFCs in refrigeration and other applications.
The expansion of the Geismar facility began before Honeywell Inc. and AlliedSignal Inc. completed their merger last December. The combined company had 1999 sales of $24 billion.
Fluorocarbons were an AlliedSignal business. Central to AlliedSignal's decision to expand its facility was growing demand for AZ-20, an azeotropic mixture of HFC-125 and HFC-32 developed by the company as a substitute for HCFC-22 in home air conditioning systems. The Geismar facility produces HFC-125, HFC-134a, HCFC-123 and HCFC-124.
The consumption of fluorocarbons in North America, Western Europe and Japan will total 591,000 metric tons in 2001, according to SRI. North American consumption will increase at an average annual rate of 2.5 percent. The Japanese market is projected to remain stable, but Western European demand is expected to decline.
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