New Quota Policy in the Refrigerant Industry Reshapes Investment Landscape

The refrigerant industry is in a period of major policy transformation. According to the industry analysis released on November 12, 2025, the short-term adjustment of the refrigerant industry is coming to an end, and the medium-term market outlook is promising, with the core driver being the 2026 new regulation on 30% quota conversion [1]. This policy change is based on the framework of the Kigali Amendment; as a Group 1 developing country, China needs to gradually reduce the production and consumption of HFCs for controlled uses starting from 2024, cutting at least 10% of the baseline value by January 1, 2029 [4].

According to the quota data issued by the Ministry of Ecology and Environment, the 2024 HFCs production quota and domestic use quota are equivalent to 1.449 billion tons and 643 million tons of CO₂ equivalent respectively, which are 404 million tons and 262 million tons of CO₂ equivalent lower than the total 2024 quota [4]. The 2025 quota allocation plan shows that the production quota for third-generation refrigerants (HFCs) is 791,900 tons, an increase of 43,400 tons year-on-year, while the production quota for second-generation refrigerants (HCFCs) is 163,600 tons, a decrease of 49,900 tons year-on-year [6].

The refrigerant industry has formed a clear oligopoly pattern, with concentration continuing to increase. In 2025, more than 95% of the total production quota for third-generation refrigerants is concentrated in 6 enterprises: Juhua Co., Ltd. (including Feiyuan Chemical), Sanmei Co., Ltd., Sinochem, Dongyue Group, Yonghe, Dongyangguang, and Meilan, among which Juhua ranks first with a share of 37.86% [6].

In terms of specific variety quota allocation:

• R32 Quota
  : Juhua Co., Ltd. (including Feiyuan Chemical) has a production quota of 128,500 tons, accounting for 45.82% of the total; Dongyue Group has a production quota of 43,900 tons, accounting for 29.46% of the total [5]
• Second-generation Refrigerants
  : Dongyue Group ranks first with a production quota share of 27.26%, followed by Juhua Co., Ltd. with 23.79% [6]

Under the quota system, enterprises’ production and operation plans have shifted from being capacity-based to quota-based, and the relationship between enterprises has changed from competition to cooperation, with market interests tending to be consistent [1]. The investment logic should focus on three core elements:

1. Sufficiency of Basic Quotas
   : Enterprises with more basic quotas have a first-mover advantage
2. Reserves of High-GWP Varieties
   : High global warming potential varieties have premium space in future conversions
3. Flexibility of Core Product Capacity
   : Enterprises that can flexibly adjust their capacity structure will obtain excess returns [1]

: As the 2025 quota policy is officially implemented, refrigerant prices continue to rise. On January 9, 2025, refrigerant concept stocks were repeatedly active, and Juhua Co., Ltd. rose by more than 7% intraday, hitting a historical high [6].

: The 2026 new regulation on 30% quota conversion will become a watershed for the industry, reshaping the industry’s value distribution pattern [1].

: According to the reduction progress of the Kigali Amendment, China needs to reduce HFCs usage to within 20% of the baseline value by 2045, meaning the refrigerant industry will enter an upward trend in price center and profit center lasting for ten years [3].

1. Premium from Supply-side Constraints
   : Under rigid quota constraints, the supply ceiling has been locked; the industry concentration CR3 reaches 76%-87% in mainstream varieties, and CR5 reaches 94%-96% [3]
2. Sustained Growth on Demand Side
   : The number of air conditioners per 100 households in China still has room for growth; the automotive industry consumes more than 40 million tons of CO₂ equivalent of HFCs refrigerants annually, and demand in emerging application fields such as cold chain logistics is strong [4]
3. Long Technology Replacement Cycle
   : Fourth-generation refrigerants as alternatives to R32 are still in the exploration stage, far from mature application, providing a long boom cycle for third-generation refrigerants [3]

1. Policy Implementation Risk
   : Need to closely monitor changes in policy implementation progress and regulatory intensity
2. Downstream Demand Fluctuation
   : The macroeconomic environment may affect demand in downstream industries such as air conditioners and automobiles
3. Technology Replacement Risk
   : Although mature application of fourth-generation refrigerants is still some time away, technological breakthroughs may change the industry pattern

The refrigerant industry is in a period of major policy-driven transformation, and the 2026 new regulation on 30% quota conversion will become a key node reshaping the industry’s value distribution [1]. The industry has formed a highly concentrated oligopoly pattern, and the competitive relationship between enterprises has shifted to cooperation under the quota system.

Enterprises with sufficient basic quotas, reserves of high-GWP varieties, and flexible core product capacity are expected to obtain excess returns in the reshaping of the industry pattern, with higher certainty of performance growth [1]. Investors should focus on leading enterprises such as Juhua Co., Ltd. and Dongyue Group, as well as companies like Sanmei Co., Ltd. which have advantages in specific varieties.

According to the long-term reduction plan of the Kigali Amendment, the refrigerant industry will face structural opportunities lasting for ten years, but at the same time, it is necessary to pay attention to risk factors such as policy implementation, demand changes, and technology replacement [2][3][4].