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Onward and upward

The global refrigerants market is poised to reach £13.3bn by 2020, with Europe set to play a major role, according to the latest report by marketsandmarkets

The global refrigerants market at present is in a state of flux with the phasing out of fluorocarbon refrigerants and the growth of the alternative refrigerants such as natural refrigerants and HFOs.

The global refrigerants market is projected to register a CAGR of 6.0 per cent between 2015 and 2020, in terms of value. The demand for cooling products is increasing worldwide with rising per capita income and standard of living.

This translates to the rise in demand for comfort products such as refrigerators and air conditioners. The growing food industry and healthcare industry is the driving force for the cooling equipment market.

Factors such as rising consumption of frozen food and increasing cooling needs are also contributing to the increase in refrigeration equipment market, which ultimately increases the demand for refrigerants.

The global refrigerants market by type is broadly segmented into fluorocarbon, inorganics, hydrocarbons, and other refrigerants. Fluorocarbon refrigerants such as CFC, HCFCs, and HFCs controlled more than 80 per cent of the global refrigerants market in 2014.

These refrigerants have had a severe indirect effect on the environment. These types of refrigerants have very GWP and ozone depletion potential (ODP).

The Montreal Protocol and the Kyoto Protocol have identified the issue and have laid down regulations for cutting down or phasing out of these refrigerants.

The refrigeration and air-conditioning industry is known as the source of close to 35 per cent of the total emissions leading to global warming. Therefore, the area has become the pinpoint for bringing reforms.

The F-gas phase-out plan in Europe and North America, along with the drive to convert to natural refrigerants by China’s Foreign Economic Cooperation Office, Ministry of Environmental Protection (FECO), and other standards and regulations set by many other non-governmental bodies around the world present a good opportunity for the growth of the natural refrigerants such as hydrocarbons and inorganic refrigerants.

Development focus

Globally, inorganic refrigerants are expected to witness a significant growth, by growing with a CAGR of 10.0 per cent from 2015 to 2020, in terms of volume. Manufacturers are focusing on the development of natural refrigerants which are based on hydrocarbons (propane, isobutane), CO2, ammonia, water, and air. Natural refrigerants have very low GWP and zero ODP. Natural refrigerants are also known for higher energy efficiency and much lower costs when compared with fluorocarbon and HFO refrigerants.

The refrigerants market stands to be potentially changed with the development of the fourth generation HFO refrigerants, which have much lower GWP values than the fluorocarbon refrigerants.

The Chemours Company (US) and Honeywell (US) are the leading companies that are active in the development of HFOs. This type of refrigerants at present have very high cost on account of patents by the respective companies.

Europe is the third-largest market for refrigerants, accounting for above 15 per cent of the global market in 2014.

Key countries in the region include Germany, France, UK, Spain, and Italy, which together accounted for around 64 per cent of the European refrigerant market in terms of volume in 2014.

Adverse market forces such as high fluctuation in raw material prices, rising manufacturing costs and tight competition from Asia-Pacific producers can affect the competitiveness of European producers.

Moreover, the currency fluctuations between the euro and dollar can lead to currency translation distortions in international sales turnover of the European manufacturers.

Refrigerants have various applications such as domestic refrigeration, commercial refrigeration, transportation refrigeration, industrial refrigeration, stationary AC, chillers and mobile AC.

The demand for refrigerants worldwide, in domestic refrigeration application is expected to witness the highest CAGR of 7.1 per cent from 2015 to 2020, in terms of volume, while stationary AC application dominated the refrigerants market in terms of market share (volume) in 2014.

Increasing annual income and rising standard of living are the major factors contributing towards the growth of refrigerants in domestic refrigeration.

Commercial refrigeration is the largest application for the European refrigerants market, while domestic refrigeration is projected to witness the highest growth between 2015 and 2020. Fluorocarbon refrigerants account for a major share of the refrigerants market in Europe but have been affected by legislations that has seen a decline in its demand.

The refrigerants market is extremely competitive with major players such as The Chemours Company (US), Daikin Industries Ltd. (Japan), Honeywell International (US), Arkema SA (France) and Mexichem (Mexico) collectively capturing a share of around 65 per cent of the total refrigerants market.

The leading refrigerants companies in Europe are Arkema SA (France.), Harp International Ltd (UK), and Linde AG (Germany).   

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