Chillers market in 2009

CONSTRUCTION

Construction industry is one of the most capital-intensive industries in Russia, that is why the decline caused by the economic crisis affected the construction industry most of all. The growth of commercial real estate commissioning volumes which characterized the past several years was supported exclusively by the unprecedentedly high oil prices and “cheap” loans. So, as the money ended the construction stopped. The lack of funding brought back to life such already forgotten concepts as “blocked object” and “retardation of work volumes figures”.

The real situation in this branch is hard to estimate because construction companies are not eager to share any information on their plans and the state of objects under construction. Besides, many buildings are commissioned in rush, by 31st of December, and the data for such buildings will be accessible next year.

When evaluating the volumes of real estate commissioned in 2009, it should be noted that construction of large share of office buildings and stores started long before the crisis and was being finished, as it is said, with the last money.

In general, according to various estimates, the decline in the construction industry constituted from 15% to 70%. The state agencies report that the bottom of the crisis had already been passed, however, the systemic issues of the industry still remain there. Still, most of construction companies do not have own assets for finishing the objects under construction, and the present-day loan rate in banks makes all loans inaccessible.

In the opinion of some analysts, against the background of such unfavorable for the construction industry events as: demand decline, stopping works at objects, minimum number of new constructions, expensive loans, reduction of staff at companies and subsequent decrease of the occupied office areas, the crisis also has some obvious positive moments. Thus, in the situation of decreasing demand for land plots, many interesting objects become more affordable, the prices for construction materials and works are decreasing, and the decreasing number of market participants is to decrease the pressure of competition.

However, despite these positive moments, the state of the industry in Russia causes rather serious concerns about the future of some large players and the construction industry as a whole.

CHILLERS MARKET

Chillers are specific chilling units. Their sales are closely related with the state of the real estate market, with the number of new buildings being commissioned each month. Of course, chillers are also installed during reconstruction of buildings already in operation, but the share of such chillers is small. That is why the decline in the construction industry led to considerable (50-55%) decline of this market in Russia.

The small-power chillers segment was heavily affected because more and more often the preference is given to traditional compression-condensation units installation of which requires smaller capital commitment.

The overall decline of production and almost complete absence of new industrial enterprises lead to the decline in the segment of chillers of industrial purpose.

The segment of medium-power (from 100 to 500 kW) aggregates suffered least of all. Sales of some types of such chillers were even higher than in 2008. In particular, Trane company noted increase in sales of machines with centrifugal compressors by 15% on the average.

Among manufacturers at the Russian market, Carrier and York are leaders while Trane, Aermec and Daikin are slightly behind. Recently, Carrier company presented a new series of water-cooled machines with screw compressors, 30XW. York added new models to YLAA series and transferred YCWL machines production from America to Europe to decrease the terms of delivery. Trane brought to Russia new high-efficiency water-cooled chillers working on R134a RTWD and monoblock chillers CGAM working on R410A. In 2009, RHOSS company presented two new series: high-performance chillers TCATBZ with centrifugal compressors and TFAEY chillers “for Russia” with “free cooling” operating mode. Daikin introduced to the Russian market its air-cooled chillers with inverter drive of EWYD-BZ single-screw compressor which have high cooling and heating rates. The model range of these chillers has been expanded up to 580 kW.

Against the background of declarations by Carrier, York, and Trane about serious decline in sales, Hitachi company declared that, as compared to the previous year, the sales of chillers made by this company in 2009 have increased. Employees of the company relate this to the fact that construction companies are eager to commission the objects in final readiness phase. Some participants of the market declare the increase in sales of chillers in terms of units sold, however, the aggregate power of units sold decreased.

In the opinion of our analysts and independent market experts, in 2009 in Russia, about 1500 chillers are to be sold having the aggregate power about 550 MW.

FORECAST FOR 2010

Most participants of the market give objective estimates of the current situation and acknowledge that 2010 is unlikely to be much better than the current year. Many of them even thing that the main decline will be just in 2010-2011: the market of chillers has large inertia and the fact that this year there were almost no new construction is to play its role only after a couple of years.
At that, the leading manufacturers are planning to increase their market shares in 2010 thus taking advantage of the relatively favorable conditions for optimizing resources and decreased competition.

Table: Data on import and manufacture of chillers in the Russian Federation in 2009 (provided by representative offices of the companies)

* – total, chillers

• – data have been provided by THERMOCOOL company Besides the above, 17 chillers with remote-mount condensers have been made of which: 2 – up to 100 kW and 15 – over 100 kW.
  
  

Participants of the Russian market of chillers answered the questions by “Climate World”

What are your company’s plans for the nearest future?

Dmitri Suyevalov, Commercial Director of AHI Carrier:

- We need to work. We will continue training dealers and developing the dealer network, including servicing network. During the past years, a large number of units had been installed, so we have something to service and operate. Our task is not to leave our customers without any attention and support no matter in what part of our huge country our customers are.

Anton Dmitriyev, “Standard Equipment” Sales Director in Russia and CIS countries of Johnson Controls in Russia (trademark of York)

- To increase our market share. Since the number of project decreased, there is an opportunity to pay more attention to each of them. Considering the high qualification of engineers working at our company the task can be performed.

Denis Lastoverov, Advertising and Marketing manager of Moscow Representative Office of HITACHI Europe GmbH:

- Among our plans for the nearest future is to expand the range of models with the chilling machines having power up to 100 kW.

Pavel Vlasov, Project Manager of the Moscow Representative Office of Midea Commercial Aircon company:

- Reinforcement of our positions at the market of industrial HVAC equipment: chillers, fan coils, centralized air-conditioning units and VRF-systems with the increase of warranty obligations, active cooperation with professional distributing companies at the Russian market and task-oriented promotion of new technologies.

How did the season pass? What effect did the crisis have on the sales of chillers by Your company?

Leonid Kiryakov, General Director of Inrost group of companies:

- In our view, the best perspectives are for air-cooled chillers with cooling capacity from 120 up to 250 kW and from 700 up to 1200 kW.

Yelena Kholopenko, Sales Department head of Trane company:

- We observe the decline of sales volumes by 35-40% as compared with the previous year (mainly due to the decline of sales of machines having power below 400 kW and water-cooled machines). At that, sales of chillers with centrifugal compressors increased, on the average, by 15% as compared to the level of the previous year.

Mikhail Morozov, Commercial Director of “Ventkor” company:

- Our sales in terms of the number of chillers, however surprising it may seem, have increased 1.4 times, but in terms of the aggregate power the decline has been by about 15%. Most likely this is due to the fact that large objects are blocked in the first place.

Veronika Silvestrova, Commercial Director of Representative Office of CLIVET in Russia:

- We formed in the situation of the crisis and, in our opinion, we operate rather successfully taking advantage of the current circumstances for development and employing more flexible approach to task solving. Like it was said: “What does not kill us makes us stronger”.

Andrei Pivinski, Candidate of Science, Technical Director of “DAC” company, distributor of Daikin.

In accordance with the demands of the market, we intend to develop the field of water-chillers and provide long-term and high-quality equipment. At that, particular emphasis is made on the energy saving qualities of both the equipment itself and technical solutions offered.

Chillers of what type and power range have the best perspectives in Russia? Why?

Maxim Pautov, Marketing and Advertisements Department head at Aermec company:

- Lately in Russia, vapor compression cooling units on the basis of screw and scroll compressors have been most popular. This is due to their relatively simple construction and the ease of maintenance, the absence of any specific requirements to the qualification of the servicing personnel.

Alexei Nikishin, Deputy General Director of LLC BCS:

- All types of chilling machines are in demand in Russia. Except perhaps for absorption-type chillers which are still exotic. As to the power ranges, the largest share (50-55%) is occupied by installations with up to 100 kW of cooling capacity, then installations from 100 to 350-400 kW (30-35%), and, further, those from the range from 400 to 1500 kW (10-20%).

Vasiliy Sergeevich Mashin, Brand Manager of Ventrade company:

- Due to the expansion of private construction, the volume of bi-directional units is to increase providing not only comfortable level of air conditioning but also hot water supply for household needs.

Andrei Selin, Deputy Head of Marketing and Advertisement Department of “THERMOCOOL” company:

- When speaking about the market of HVAC chillers one should expect expansion of the medium-capacity chillers segment in the future. Given the growth of electric energy prices, energy-saving solutions are likely to be in demand, as well as the systems using the natural cold, chillers with centrifugal compressors, with water condensers.

Yelena Kuleshova, Director of “Professional HVAC equipment and ventilation” department of EuroCLIMATE company.

This year GREE chillers came out successfully at the market. Our customers are most interested in chillers with water-cooled condensers with the capacity over 500 kW. As of now, such chillers have been used in projects of many important objects in Russia. More and more often, customers take into consideration not only the price of equipment, but rather operation costs. Due to this fact, the demand for energy-saving equipment consuming small amount of energy is increasing.