On Jan. 29, the U.S. Department of Commerce announced an affirmative preliminary determination in its antidumping duty investigation of hydrofluorocarbon (HFC) refrigerants from China. The situation isn’t resolved yet — a key word here is “preliminary” — but this determination gives the industry every reason to believe that the final determination this summer will also be affirmative, and an antidumping order will be issued.
By way of background, this preliminary determination means that the Commerce Department has determined that HFC refrigerants from China have been sold in the U.S. at dumping margins ranging from 91.99 percent to 210.46 percent. This, as you might imagine, attracted the attention of American manufacturers of HFCs. In July 2015 the American HFC Coalition and its individual members (Amtrol Inc., Arkema Inc., The Chemours Co., Honeywell International Inc., Hudson Technologies, Mexichem Fluor Inc., and Worthington Industries Inc.) filed a petition with the U.S. Department of Commerce and U.S. International Trade Commission (ITC).
The petition was filed in response to large and increasing volumes of low-priced imports from China. According to the coalition, Chinese producers have injured the U.S. industry by selling the refrigerants at unfairly low prices that consistently undercut the prices of U.S. producers. This has had a direct negative impact on U.S. producer revenues and profitability. Low-priced imports from China have been and continue to capture increasing shares of the U.S. market at the direct expense of the U.S. industry.
The petition seeks the imposition of antidumping duties to level the playing field. The HFC blends affected are R-404, R-407A, R- 407C, R-410A, and R-507A; the single-component HFCs covered are R-32, R-125, and R-143a.
So what’s next? If the Commerce Department and the ITC both make an affirmative final determination that these HFC imports materially injure or threaten material injury to the domestic industry, the Commerce Department will issue an antidumping order. If either makes a negative determination, no antidumping order. The Commerce Department is scheduled to announce its final determination in June; the ITC in July.
But enough of the history lesson, what does all this mean for refrigeration contractors? Well the most obvious answer is that if an antidumping order is issued — and, as noted above, that certainly seemed to be likely based on the recent preliminary determination — prices for HFCs will likely increase. It’s simple capitalism: the cheapest stuff will no longer be on the market.
But I for one would hate to hear much complaining about this. First of all, we all know how difficult it can be to compete in a global economy. If it’s determined that China wasn’t playing fairly at the expense of American companies, that must be addressed and the playing field must be leveled.
And yes, you’ll probably pay more for HFCs, which means your customers will pay more, and everybody will scowl. But by buying from American producers or EPA-certified reclaimers, you can rest assured that you’re getting a quality product. You’ll know exactly what’s in that canister.
Think of it this way: when you run your business, do you strive to be the cheapest company out there? Or do you sell quality and know that your customers are smart enough to understand the difference? Think of the Chinese refrigerants as the “Bubba” contractors that you hate having in your market — the guys whose only redeeming value is low price. You want your customers to appreciate the difference in quality that your company offers — and to be willing to pay a little extra for it. Be willing to apply that same thought process when you’re the customer, too.