Guotai Junan Securities: Mainstream refrigerant prices continue to rise, liquid cooling sector opens up growth space

According to the Zhitong Finance APP, Guosen Securities released a research report stating that as the annual quota continues to be digested, the available supply from various companies within the year is limited, showing a clear mindset of holding prices and reluctance to sell. The supply side has strong support for price increases, and the new order price for R32 may still have further upward potential, with average prices expected to be 62,000 yuan/ton, 63,000 yuan/ton, and 64,000 yuan/ton from September to November. In addition, with the development of AI technology, the power density of servers has significantly increased, and traditional air cooling methods have reached a bottleneck. Liquid cooling technology can effectively reduce the PUE of data centers, with immersion and two-phase cold plate liquid cooling becoming future trends, driving rapid growth in the demand for upstream fluorinated liquids and refrigerants, each with its own advantages, including perfluoropolyether, hydrofluoroether, perfluoroamine, and hexafluoropropylene oligomers.

The main points of Guosen Securities are as follows:

Future price stability and growth of mainstream refrigerant products

Regarding R32, as the annual quota continues to be digested, the available supply from various companies within the year is limited, showing a clear mindset of holding prices and reluctance to sell. The supply side has strong support for price increases, and new order prices may still have further upward potential. Average prices are expected to be 62,000 yuan/ton, 63,000 yuan/ton, and 64,000 yuan/ton from September to November. For R134a, as the annual quota continues to be digested, the seller's mindset of holding prices may continue to strengthen. The gradual increase in export demand in the fourth quarter, along with long-term contract orders for aerosol cans entering the negotiation stage, still provides strong fundamental support for the market, which may have further upward expectations. Zhuochuang Information predicts that in the next three months, the domestic refrigerant R134a market price may continue to rise steadily, with average prices expected to be 52,000 yuan/ton, 53,000 yuan/ton, and 54,000 yuan/ton from September to November.

Regarding export prices, as of July 2025, the average export prices of products such as R22, R32, and R134a are affected by customs clearance and shipping cycles, still showing a backwardation compared to domestic monthly prices, but the internal and external trade quotes from enterprises have become consistent. Specifically, the average export price of R32 in July 2025 is 46,576 yuan/ton, R22 is 26,480 yuan/ton, R134a is 44,598 yuan/ton, and the average export price of the R125/R143 series is 31,665 yuan/ton.

Last year's high base for air conditioning production, total air conditioning output in September 2025 is expected to decline year-on-year

In the first half of 2025, the domestic air conditioning production data continued to rise, with a passive reduction in exports from January to February, gradually increasing in March. In addition to the impact of seasonal stocking factors, the promotion of two new policies also had a significant boost. From May to June, as the 618 shopping festival approached and demand peaked, production performance showed strong growth. Entering the summer, high temperatures in Northeast China, Shandong, Henan, and other regions boosted sales in the air conditioning terminal market, further digesting industry inventory.

Entering the third quarter, the domestic air conditioning production in September showed a downward trend. On one hand, this is affected by last year's high base of national subsidies; on the other hand, it is due to the further depletion of demand in the first half of the year, leading enterprises to be cautious about production expectations. In terms of exports, according to customs data, from January to July, China's cumulative air conditioning exports reached 44.92 million units, a year-on-year increase of 4.2%. The export market began to show a downward trend from May, with June seeing growth only in Oceania due to a low base, while other regions experienced varying degrees of decline. In July, exports were under pressure from high inventory, overall in a downward cycle, with the exception of Europe benefiting from high temperatures and showing growth, and Oceania achieving some growth due to a low base Asia and Latin America have shown a decline due to restrictions on re-export trade.

In terms of production scheduling, according to the domestic air conditioning production report from the Industry Online, the production scheduled for September 2025 is 5.72 million units, a year-on-year decrease of 6.3%; the production scheduled for October has decreased by 23.4% year-on-year, and the production scheduled for November has decreased by 17.6% year-on-year. In terms of export production scheduling, the export production scheduled for September 2025 is 5.025 million units, a year-on-year decrease of 16.6%; the decline in export production scheduled for October and November is gradually improving.

Liquid cooling drives the demand for upstream fluorinated liquids and refrigerants

With the development of AI technology, the power density of servers has significantly increased, and traditional air cooling methods have reached a bottleneck. Liquid cooling technology can effectively reduce the PUE of data centers, with immersion and two-phase cold plate liquid cooling becoming future trends, driving rapid growth in the demand for upstream fluorinated liquids and refrigerants. Perfluoropolyether, hydrofluoroether, perfluoroamine, and hexafluoropropylene oligomers each have their advantages. It is recommended to pay attention to companies such as ZJJH, Sanmei, DONGYUE GROUP, and Yonghe. In addition, R134a can be used for two-phase cold plate coolants, with ZJJH holding an R134a quota of 76,500 tons, accounting for 37%; HCSC holds a quota of 54,200 tons, accounting for 26%; and Sanmei holds a quota of 49,900 tons, accounting for 24%.

Investment recommendations

The compliance reduction of second-generation refrigerants will accelerate in 2025, and the quota system for third-generation refrigerants will continue. The industry concentration of varieties such as R22 and R32 is high; the demand side is stimulated by national subsidy policies and the growth of demand in emerging regions such as Southeast Asia, leading to a significant increase in domestic and foreign air conditioning production and scheduling. With the rapid contraction of supply for second-generation refrigerants like R22 and support from the air conditioning repair market, a supply-demand gap is expected to emerge in 2025; although the supply of third-generation refrigerant R32 has slightly increased year-on-year, inventory is expected to be depleted by 2024, and the demand side is also showing rapid growth, with a tight balance between supply and demand expected to be maintained in 2025.

Guotai Junan Securities believes that the tightening of refrigerant quota constraints is a long-term trend. Against this backdrop, it is optimistic that the prosperity of second-generation and third-generation refrigerants such as R22 and R32 will continue, with significant long-term price upside potential; leading companies in the quota of second-generation and third-generation refrigerants are expected to maintain high profitability levels in the long term. Additionally, it is optimistic about the liquid cooling industry's enhancement of demand for fluorinated liquids and refrigerants. It is recommended to pay attention to leading fluorochemical companies with complete industrial chains, comprehensive infrastructure, leading refrigerant quotas, and advanced process technologies, as well as upstream resource leaders. Related targets include ZJJH (600160.SH), DONGYUE GROUP (00189), and Sanmei (603379.SH).

Risk warnings

Demand for fluorochemical products may not meet expectations; policy risks (tightening environmental policies for fluorinated refrigerants, accelerated upgrade processes, changes in quota issuance policies, etc.); global trade frictions and export obstacles; low real estate cycle prosperity; project production progress of various companies may not meet expectations; rising raw material prices; chemical safety production risks, etc