Refrigerants & Reclaim

Government Considering Sanctions Against Chinese Refrigerants

U.S. ITC Votes to Move Forward on Illegal HFC-134a Imports

December 30, 2013

The U.S. International Trade Commission (ITC) voted 6-0 on Dec. 13 to move forward against China regarding possible illegal hydrofluorocarbon (HFC)-134a coming into the U.S.

The decision is in regards to a petition filed with the U.S. Department of Commerce in which St. Gabriel, La.-based Mexichem Fluor asked the government to impose sanctions on such imports.

The ITC will now determine whether the U.S. industry is being materially injured or threatened with material injury. A final determination may not come until October 2014.

“The massive Chinese overcapacity, Chinese government subsidies, and Chinese underselling — combined with the U.S. industry’s need to operate at high utilization levels — makes the domestic industry quite vulnerable to a real and imminent threat of injury,” said Mexichem, in its petition

Industry Response

The Mexichem action is another in a series of long-running skirmishes between reputable producers of refrigerants and those producing refrigerants allegedly coming from uncertain sources and/or coming into the U.S. illegally. But the current flourish has taken a higher profile.

Jay Kestenbaum, senior vice president for sales and purchasing, Airgas, said, “The 6-0 vote sends a strong statement to the industry” about the ITC’s concern. He suggested the salvo from Mexichem will be repeated by other refrigerant manufacturers.

Gordon McKinney, vice president and COO of ICOR Intl. Inc., stated the case could impact refrigerant costs. He said, “Mexichem’s R-134a anti-dumping suit against the Chinese is truly unprecedented. The ITC’s announcement is sure to have a significant impact on R-134a pricing in the U.S. market for a large part of 2014. Since R-134a is used as a component in many of the mainstream HFC blends imported from China, i.e. R-404A, the R-407 Series, and several other domestically produced blends, this suit could have even broader implications on market dynamics next year than many have considered.”

Ongoing Battle

The current legal action is one of many industry representatives have initiated in the battle against illegally imported and counterfeit refrigerants. Another refrigerant that has been subject of importation and counterfeit concerns is HCFC-22. For example, in 2012, the owner of an appliance parts business was sentenced to 13 months in prison for becoming involved in the smuggling of counterfeit R-22 from China. It was a complex scheme involving use of cargo containers on a small freighter, false shipping documents, and faked invoices. And a few years before, the president of a company pleaded guilty to knowingly importing illegal R-22 and was sentenced to 30 months imprisonment followed by three years of supervised release. The corporation itself faced five years of probation and two other persons involved were required to pay a $40,000 fine and forfeit $1.3 million to the U.S.

Whatever the refrigerant, reputable manufacturers, importers, and distributors, as well as trade associations, are focusing on both the regulatory and safety issues regarding counterfeits and illegal imports. These groups are alerting HVACR contractors that those found to be manufacturing, possessing, or shipping such refrigerants are subject to prosecution. It’s also important to note that such refrigerants could include an unsafe blend of something other than what is identified on the label, leading to system damage or a potential fatal explosion.

Publication date: 12/30/2013 

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