Core Viewpoint - The Ministry of Ecology and Environment released a draft plan for the total allocation of ozone-depleting substances for 2026, indicating a reduction in production and internal use quotas for HCFCs and HFCs, which may sustain high industry prosperity due to supply constraints and strong demand in air conditioning markets [1] Group 1: Quota Adjustments - For HCFCs, the production and internal use quotas for 2026 are set at 151,400 tons and 79,700 tons, respectively, representing a decrease of 12,200 tons and 6,300 tons compared to 2025 [1] - Specifically, the R22 production and internal use quotas for 2026 are 146,100 tons and 78,000 tons, reflecting a reduction of 3,000 tons and 2,900 tons from 2025 [1] Group 2: HFCs Quota Changes - In the case of HFCs, the production quota for R245fa is increased by 3,000 tons for 2026 compared to 2025, while the R41 production quota is raised by 50 tons, with other varieties remaining unchanged [1] Group 3: Industry Outlook - The quota system for refrigerants HCFCs and HFCs maintains supply constraints, combined with high product concentration, a favorable competitive landscape, and robust demand from household and automotive air conditioning, suggesting that the industry's high prosperity may continue [1]

Core Viewpoint - The Ministry of Ecology and Environment has proposed a draft to ban the production of household refrigerators and freezers using hydrofluorocarbons (HFCs) as refrigerants starting from January 1, 2026, marking a significant step towards environmental protection and compliance with international agreements [1][2]. Group 1: Regulatory Changes - The draft aims to phase out HFCs, which are potent greenhouse gases and significant contributors to ozone layer depletion, by promoting the use of more environmentally friendly refrigerants like R600a, which has a low global warming potential [1]. - The Kigali Amendment to the Montreal Protocol, accepted by China in 2021, sets a target to reduce global HFCs by at least 80% over the coming decades, with the formal implementation in China starting in September 2021 [2]. Group 2: Industry Impact - The 2025 plan outlines a 10% reduction in the production and usage of HFCs compared to baseline values, with a specific quota reduction of 51,241 tons for 2025 compared to 2024 [3]. - The Chinese home appliance industry has seen significant growth, with total revenue reaching 1.84 trillion yuan and total profits of 156.5 billion yuan in 2023, while also achieving over 50% of global production share in major home appliance products [3]. Group 3: Compliance and Enforcement - The draft mandates that relevant departments ensure companies comply with the regulations regarding the elimination of HFCs in household refrigeration, with penalties for violations enforced by local environmental authorities [4].