Written by Saziye Dickson, Market Research Consultant, BSRIA Worldwide Market Intelligence
The chiller market has suffered a fall out from the Global Financial Crisis of 2008. Cuts in spending had a catastrophic effect on the chiller market as the market heavily relies on large investments and construction. Some of the major markets which have been worst affected are: US -25%, China -3%, Japan -20%, S. Korea, -26%, UK -39%. On the other hand some markets have not been affected at all during that year India and Saudi Arabia are examples of these.
With an improving global economy, much needed growth for the total global chiller market came in 2013 increasing from US$ 8.2 billion to US$8.5 billion which represents around 3% growth. The two biggest markets: Asia Pacific and Americas both showed around 5% growth each by value in 2013. Whilst the European, Middle East, India and Africa regions both declined by 1% and 2% respectively in the same year.
China and USA dominate the market for chillers; accounting for 32% and 12% respectively of the world market by value.
Although growth was visible across most segments of chillers, centrifugal chillers were by far the most successful compressors in 2013. The growth in the Chinese market was the major contributor to the overall global numbers, other major markets are; US, India, Saudi Arabia, Indonesia, Thailand, UK, Mexico, Germany and Brazil, in order of contribution.
Global top ten chiller countries by value in 2013 (click image to zoom)
A reduction in the number of large government and industrial projects in China is having a downward trend for large size chillers. In the Western China Development, demands from hospitals, energy plants , schools and telecommunications continues to support the centrifugal and absorption chillers.
In the US oil free centrifugal (Turbocor) continue to gain market share. The main driver in India is energy efficiency: where oil free centrifugal is also being preferred. In Indonesia large shopping malls and airports are the main markets of these products. In the UK the market was driven by high rise office buildings, airports and replacement of R22 refrigerants, which were traditional centrifugal chillers.
The growth in the chiller market was 5% by value reaching, US$4.1billion in 2013. The growth is expected to continue for the forecast period at a CAGR of 5%.
The top performing countries in 2013 were in order of growth Vietnam, Thailand and China.
In Vietnam the market was supported by a small number of very large projects, which were mainly supplied by centrifugal chillers. In Thailand, most of the projects were overflow from 2012 and the central plant market slowed down quickly at the start of 2013 and worsened after the anti-government protest started in November 2013.
In China scroll chillers experienced the highest growth with its characteristics of high value for money and ease of installation. East China remains as the biggest market for chillers, followed by North and South China.
The worst performing countries were Australia, Taiwan and Malaysia. Late economic slowdown has caused the drop in overall chiller numbers in Australia especially in centrifugal market. Centrifugal chillers comprised around 54% of the market in 2013 in value terms. In Taiwan lower government investment and flat private investments were the main reason behind a contraction of the market. The election in 2012 caused many new
projects to be put on hold, this meant that there were no new projects at a sufficiently advanced stage. The market is forecasted to pick-up in 2014 in Malaysia.
Worldwide share chiller market by value 2013 (click image to zoom)
The biggest chiller market in Americas, is the US, which grew around 3%, the US market accounts around 69% of the total chiller market in the region. The second and third biggest countries are Brazil and Mexico also showed growth of 17% and 5% accordingly.
The market for chillers started to react to the US economic recovery and the speed of the recovery is expected to continue in 2014 and 2015 with the acceleration in the building of new commercial properties.
The chiller market continued its double digit growth in 2013 as a result of retrofit and infrastructure improvements in Brazil and a booming economy which has now slowed but still promises to grow considerably in the next 5 years.
In Mexico, the ch
iller market performed well during 2013. It has increased in most of its segments thanks to projects that were in the pipeline before the presidential election process started.
After three consecutive years of growth from 2010 to 2012, Venezuela was the only major market in the region to contract in 2013. The main cause was the weak economic climate and the severe electrical restrictions caused by shut offs on the national electric grid which have affected the market.
Middle East India and Africa
The region suffered in 2013 due to economic and political unrest. The total chiller market declined by 2% and has fallen below US$1.3 billion. Most of the countries in the region recorded a drop in sales; Egypt -17%, India -7%, Iran -6%, Nigeria -3% and UAE-3%. Good news came from South Africa and Saudi Arabia which grew 7% and 4% respectively.
In India privately funded projects were scarce so government funded projects were driving construct
ion industry in 2013. During 2014, government projects have reduced and privately funded projects are still subdued which has caused a major slowdown in all segments of the construction industry and resulted in slowdown in chiller sales.
In Saudi Arabia, most chillers declined by around 14% by value, however a 40% growth in the centrifugal market, accounting for 46% of the market saved the year.
South Africa also managed to grow in the midst of a mining crisis. The players refocused their business on other outlets such as food, beverage, process cooling, abattoirs, car workshops, exhaust centres and paint shops.
Expected future growth for Chillers in Europe (CAGR 2012-2017) (click image to zoom)
The total European chiller market declined by 1% in 2013, the market remained just above US$1.6 billion.
Weak economic growth is hampering the chiller market in many of the European markets. The exception to this is the UK which is starting to bounce back up from a dip in 2013, following new investments into projects by building owner/operators and speculative property developers who now have greater confidence about the country’s economic outlook. Much of this development is centred on London area.
Against the backdrop of stagnant growth in the European continent, legislation and other regulations are providing a boost to sales which would otherwise be much more in the doldrums.
R22 replacement programmes are expected to drive sales within the European Community as well as the need for more energy efficient equipment.
In many countries the three main compressors competing for limited projects are oil free centrifugal (Turbocor), screw and scroll. Companies have responded to the threat of oil free centrifugal market by improving the efficiencies of their non-inverter screw. The penetration of the inverter compressors remains low, due to its higher capital price, and the lack of players offering this product, but it is slowly increasing from a low base.
The outlook for the rest of 2014 and 2015 remains subdued as much of Europe has yet to see a significant economic recovery.