developments downstream: the new generation of fluorochemicals

© 2014 IHS

Information | Analytics | Expertise

© 2015 IHS

DEVELOPMENTS DOWNSTREAM:

THE NEW GENERATION OF

FLUOROCHEMICALS

8 OCTOBER 2015, MARRAKECH, MOROCCO

Ray Will, Director, Specialty and Inorganic Chemicals

+1 408 343 4837

[email protected]

• The latest in the phase out of HFCs and its impact on the chemical supply chain

• Growth and proliferation of HFO and its several applications

• Are there regional differences in demand for new generation fluorochemicals?

© 2015 IHS

FLUORSPAR 2015/ OCTOBER 2015

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� DEVELOPMENTS DOWNSTREAM: THE NEW

GENERATION OF FLUOROCHEMICALS

�The latest in the phase out of HFCs and its impact on

the chemical supply chain

�Growth and proliferation of HFO and its several

applications

�Are there regional differences in demand for new

generation fluorochemicals?

�Impacts to Fluorspar Consumption and the Market?


6

© 2015 IHS

Recent Regulatory Developments Concerning HFCs (US)


Event

June 2013

United States & China agree to phase down HFC consumption &

production with multilateral cooperation using the expertise and

institutions of the Montreal Protocol

September 2013

United States reaches agreements to phase down HFCs with G-20

& China under UN Framework Convention on Climate Change

(UNFCCC) using the expertise and institutions of the Montreal Protocol

and Kyoto Protocol for accounting and reporting emissions.

April 2015

2015 North American Amendment Proposal to Address HFCs

under the Montreal Protocol

The United States, Canada and Mexico submitted a proposal to phase-

down production and consumption of HFCs under the Montreal

Protocol.

July 2015

Narrower use limits for HFCs as alternatives to CFCs

Final Rule, 40 CFR Part 82, Protection of Stratospheric Ozone: Change

of Listing Status for Certain Substitutes Under the Significant New

Alternatives Policy Program (SNAP)

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© 2015 IHS

Selected HFC Use Restrictions Under SNAP (US)


Application HFC-134a HFC-125

Propellants

Unacceptable as of

July 20, 2016, except

uses listed as

acceptable, subject to

use conditions

Unacceptable

as of July 20,

2016

Refrigeration:

Vending

machines, new

Unacceptable as of

January 1, 2019

Refrigeration:

Retail food, new

equipment

Unacceptable as of

January 1, 2020

Motor vehicle air

conditioning,

new cars

Unacceptable as of

Model Year 2021,

except where allowed

under narrowed use

limit

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Source: US Federal Register, Part II Environmental Protection Agency, 40 CFR Part 82, Subpart G, July 20, 2015

© 2015 IHS

Selected HFC Use Restrictions Under SNAP (US)—

Foam Blowing (continued)


Application HFC-134a HFC-245fa HFC-365mfc

Flexible

Polyurethane

Unacceptable as of

January 1, 2017 except

under narrowed use limit*

Unacceptable as of



Unacceptable as of



Polystyrene:

Extruded Sheet

Unacceptable as of



Unacceptable as of



Unacceptable as of



Rigid

Polyurethane:

Commercial

Refrigeration &

Sandwich Panels

Unacceptable as of

January 1, 2020, except

where allowed under a

narrowed use permit*

Unacceptable as of




Unacceptable as of




Rigid

Polyurethane:

Appliance

Unacceptable as of




Unacceptable as of




Unacceptable as of




9

*i.e. only in military or space and aeronautics-related applications.


© 2015 IHS

Selected HFC Use Restrictions Under SNAP (US)—

Foam Blowing (continued)


Application HFC-134a HFC-245fa HFC-365mfc

Rigid Polyurethane:

Slabstock and Other

Unacceptable as of




Unacceptable as of




Unacceptable as of




Rigid Polyurethane:

Marine Flotation Foam

Unacceptable as of




Unacceptable as of




Unacceptable as of




Polystyrene Extruded

Boardstock and Billet

Unacceptable as of




Unacceptable as of




Unacceptable as of




10


*i.e. only in military or space and aeronautics-related applications.

© 2015 IHS

HFC Bans in the EU


Application Prohibition Date Example of HFC Product

Banned

GWP Limit

Domestic Refrigeration 1 January 2015 HFC-134a <150

Commercial Refrigeration1 January 2020 R-404A (125/143a/134a) <2,500

1 January 2022 HFC-134a <150

Movable Air Conditioning 1 January 2020 HFC-134a <150

Plastic Foaming Agents

Expanded Polystyrene1 January 2020 HFC-365 mfc <150

Plastic Foaming Agents

Other Foams1 January 2023 HFC-365 mfc <150

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Source: Official Journal of the European Union, 20.5.2014

EU bans target the high Global Warming Potential of HFCs and Refrigerant Blends containing

HFCs

© 2015 IHS

HFC Phase Out—

Raw Material Impacts, Chlorinated Organics


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The above pie chart represents chlorinated feedstocks used in the production of

HFCs—the quantities reflect the total global market. A large portion of the

chlorinated organics shown above are used for HFCs and thus will have a declining

market.

1,1,1 Trichloroethane

5%

Trichloroethylene22%

Perchloroethylene19%

Methylene Chloride

48%

HFCs: 125,

134a

HFC-32

HFCs: 245fa,

365mfc

CarbonTetraChloride

6%

HFC-134a

HFC-134a

2014 Global Total: 2,146 KMT

© 2015 IHS

Recent Changes Among Upstream Raw Material

Suppliers and Downstream HFC Producers


Event

30 January 2015Solvay sold its Germany-based refrigerants business including HFCs

and pharma propellants business to Daikin

27 March 2015Dow Chemical sold its Chlorine Business, including chlorinated

organic feed stocks for HFC and HFO production to Olin

3 August 2015

DuPont completed the spin-off of Chemours as an independent

publicly traded company. Chemours’ businesses include

fluorochemicals including HFCs as well as HFOs

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© 2015 IHS© 2015 IHS

• DEVELOPMENTS DOWNSTREAM: THE NEW


�The latest in the phase out of HFCs and its impact

on the chemical supply chain


applications





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© 2015 IHS

HFO applications--Refrigeration


Refrigeration Replaces Application

Blend: R-452AHFC-32/ HFC-125/ HFO-

1234yfR-404A blend Refrigerated transport

Blend: R-449-AHFC-32/ HFC-125/ HFO-

1234yf/ HFC-134a

R-404A &

R-507 blends

Low & medium temperature

commercial refrigeration

Blend: R-513A * HFO-1234yf/ HFC-134a HFC-134aCommercial refrigeration, water

chillers & heat pumps

Additional HFOs and HFO blends are being tested

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*Pending ASHRAE number

HFO refrigeration applications are expected to include use in pure form and in blends

© 2015 IHS

HFO applications (continued)


Foam Blowing Replaces Application

HFO-1233zd(E)HFC-134a, HFC-245fa, HFC-

365mfcRigid polyurethane: Appliances

HFO-1233zd(E),

HFO-1234ze(E)

HFC-134a, HFC-245fa, HFC-

365mfc

Rigid polyurethane: Commercial

Refrigeration & Sandwich panels

HFO-1233zd(E)HFC-134a, HFC-245fa, HFC-

365mfcFlexible polyurethane

HFO-1234ze(E)HFC-134a, HFC-245fa, HFC-

365mfc

Polystyrene: Extruded Boardstock

and Billet (XPS)

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Mobile Air Conditioning Replaces Application

HFO-1234yf HFC-134a Automobiles and light trucks

Additional HFO blends are being tested

© 2015 IHS

HFO’s Market Entry—Mobile Air Conditioning (MAC)


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Outside of Europe HFO is likely to be in full

implementation for MAC by or after 2025

Nearly every county or region shown is already

making HFO introductions in limited models

However, IHS forecasts that CO2, an alternative

refrigerant will be introduced in Europe as soon as

2017 and will grow at the expense of the HFO MAC

market and will spread to other regions in

subsequent years after 2020

IHS forecasts that HFC-134a will remain the world’s

dominant MAC refrigerant through 2025, as it will be

used to service vehicles manufactured prior to HFO

implementation.

HFO Full Implementation at

OEM

2017 EU

By 2025

or later

North America

Japan

South Korea

China

Thailand

India

Rest of Asia

South Africa

Other Africa

South America

© 2015 IHS

HFO’s Market Entry—Refrigeration & Air Conditioning


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• The US is the world’s largest HFC market dominated by refrigeration & air conditioning

applications. In turn HFO will have the world’s largest market in the US where it will

partially replace the use of HFCs

• Alternative hydrocarbon refrigerants such as propane and isobutane are expected to

take a significant portion of the market as the phase out of HFCs advances in the US

• The shift to hydrocarbon refrigerants in the US will strongly resemble recent

developments in Europe & Japan where hydrocarbon refrigerants have displaced HFCs

in domestic and commercial refrigeration

• Regions outside of the US, Europe and Japan will also shift from HFC refrigerants to

alternative refrigerants including HFO, hydrocarbons and other not-in-kind alternatives.

The lower cost of hydrocarbon and other not-in-kind alternative refrigerants will tend to

limit HFOs to applications to where there are performance advantages

© 2015 IHS

HFO’s Market Entry—Propellants, Foam Blowing and

Solvent Use


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• For aerosol propellants HFO-1234ze can provide an alternative to using HFC-134a and

HFC-152a

• For plastic foam blowing HFO-1234ze can provide an alternative for HFC-134a, HFC-

152a, HFC-245fa and HFC-365mfc.

• For solvent uses HFO-1234ze can provide an alternative to HFC-134a and HFC-

431mee and other niche fluorochemicals also subject to phase out due to their high

GWP.

• As with other HFC segments not all applications will shift to HFO so there will be some

loss of markets to not-in-kind alternatives

© 2015 IHS

Impacts to Fluorspar Consumption and the Market?


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• Given the current HFC phase-outs in place plus the rise in production of HFOs IHS

projects a rise in acidspar direct and indirect demand from 2015 through 2019 for the US

and Europe.

• Between 2015 and 2019 there will be significant transitions in the market segments

served by HFCs as specific HFCs and blends are phased out and replacement products

are phased in. There will be:

�Continuing new equipment introductions using new refrigerants (MAC, Stationary

a/c, Refrigeration) including HFOs, and not-in-kind alternatives

�HFC producers will be inclined to rationalize HFC production so expect production

allocations to be sold to other producers as plants are closed

�HFC consumers may experience a tight market for HFC supply as allocations are

imposed particularly beginning in 2018

© 2015 IHS


Summary • There will be continuing changes to the

regulations—stay tuned for updates

• In the US much of the recent regulatory

change has been the result of executive

order—current policy could be changed

by a new administration

• Watch for developments in China’s

activity in both fluorochemical markets

and climate change regulations

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© 2015 IHS


Thank you

Ray Will, Director, Inorganic and Specialty

Chemical Consulting

IHS Chemical Consulting

+1 408 343 4837

[email protected]

24

developments downstream: the new generation of fluorochemicals

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