The Brazilian air conditioning market

Thursday, January 18, 2018
Reported by the Brazilian Association for HVAC&R (ABRAVA)
The Brazilian air conditioning market suffered because of the economic crisis and a reduction in the level of both public and private investment. And this effect was strongly felt in the chiller market which reached a peak sales volume/ installed volume in 2013 and 2014.
This volume was driven by the expansion of the economy. During the period from 2013 to 2014, the industrial market was expanded focusing on automotive and chemistry sectors. The commercial market was expanded focusing on shopping malls, retails, and high-standard corporate buildings. The infrastructure sector was also expanded driven by major sporting events such as 2014 FIFA World Cup and Rio 2016 Olympics. These market expansion generated new and retrofit business opportunities in the chiller market for stadiums, arenas, airports, hotels, subways, etc.
However, this cycle ended and during the following two years the market fell almost 50% in volume, affecting lives and billing across the industry, from small and large equipment manufacturers, through designers, installers, and even maintenance companies.
After two years of sharp decline, a slight recovery of the market is expected in 2017, in line with a rise in gross domestic product (GDP). However, ABRAVA’s statistics demonstrate an ongoing downturn in the chiller market, and the year 2017 is expected to bring a decrease of around 13% compared with 2016, according to cumulative sales from January to September 2017.
As for specific types of systems/ equipment, during this period there was an increase in the share of locally made equipment at the expense of imported centrifugal chillers which was highly impacted by a reduction in the average size of the works, as well as increased depreciation with respect to foreign currencies, generating a greater trend to opt for equipment made in the country and with prices in Brazilian reals. For the first time in many years, Brazil encountered two months during which no centrifugal chillers were sold or delivered in the country.
As to the type of equipment, the share of air-cooled screw and scroll chillers represents more than 50% of the market, showing a tendency to acquire simpler core systems which are cheaper than water-cooled models.
In the water-cooled segment, which operates in conjunction with cooling towers, crew chillers lead the market with almost 30% share and a cumulative volume of 28%, the most of which are non-inverter models. On the other hand, the share of centrifugal chillers is still lower than the historic average of 30% and today still does not reach 20%, being at a cumulative level of 17%. Water-cooled scroll chillers accounted for 1%, almost disappearing from the market.
One relatively bright spot was the high efficiency/retrofit market, which was helped by the chaos in the electricity sector and the price of electricity which increased in 2015 and 2016. Many projects that were postponed are now underway or prioritized in order to increase competitiveness and generate a reduction in the operating costs of industries, malls, and corporate buildings. Such behavior of the market should remain in the coming two to three years.
In general, the retrofits not only bring economic benefits but also in many cases help the elimination of chlorofluorocarbon (CFC) and hydrochlorofluorocarbon (HCFC) refrigerants, thus reducing the environmental impact and maintenance costs.
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