The production dynamics and structure were analyzed basing on the provided by the APHR data for the first half year of 2016 and the same period of the previous year on the following heating device categories: aluminum, bimetal and steel heating radiators, steel and copper-aluminum convectors (wall-, floor-, underfloor-type).
In the first half year of 2016 the aluminum and bimetal heating radiator sector saw Russian manufacturers show a 20% production growth.
At that, the most considerable growth was shown by recently established enterprises intensely enhancing their production capacities (up to 75%), while the growth index shown by large plants consistently operating for a long time did not exceed 5%.
These general indicators of growth prove that Russian manufacturers are capable of effective import substitution on the internal market of aluminum and bimetal heating radiators in the conditions of decreasing imports.
Besides, the fact that Russian plants working in this heating equipment sector are not exploiting their manufacturing capacities to the full is also a proof of a certain ‘margin of safety’ to satisfy the market demand in case the aluminum and bimetal heating radiator imports continue to fall further on.
Growing production and increasing manufacturing capacities make enterprises more price-competitive to imported goods due to the economy-on-scale effect.
As the APHR estimates, in 2016 the increase in aluminum and bimetal heating radiator production in Russia can reach 40% against the 2015 indicators.
One of the key trends is a considerable growth in production and share of Russian bimetal heating radiators in proportion to all-aluminum ones.
Over the last two years bimetal heating radiators have come to considerably prevail over aluminum radiators in quantity; some manufacturers have almost completely switched from aluminum to bimetal (bringing the share of bimetal heating radiator manufacturing to 90% of the total production).
The steel panel heating radiator sector has also seen a rise in the domestic production, though it was not so substantial – about 10%.
2016 can see the steel panel radiator manufacture increase by 15-20%: the largest Russian manufacturer of steel panel radiators – Research Technological Institute Progress OAO (Izhevsk, the Udmurt Republic, Prado trademark) – can show a 5–10% growth in 2016; increasing production is also expected to be displayed by the recently established Bosch plant in Engels, the Saratov region (Buderus trademark).
Meanwhile, the steel panel radiator imports into Russia remain at the same level, which is likely to be proved by the general 2016 import analysis.
The convector manufacture sector is showing the following production dynamics that can be segregated by the convector type.
In the first half of 2016 large manufacturers of affordable steel wall convectors have lowered their production by 14% against the same period of the previous year (for certain companies).
However, against the background of general growth in the domestic heating equipment production, the cause of this fall is not the increasing amount and share of imports in this segment, but other reasons.
Firstly, steel wall convectors are widely installed in new economy class housing, whose construction in the first half of 2016 was steadily falling due to the general crisis condition of the economy.
Secondly, the convector market gave room to a certain “gray zone” of garage-made goods popular with small-scale contractors for their extremely low price.
In the near future the APHR is going to introduce a number of measures to prevent falsified convector goods from entering the turnover.
In their turn, leading Russian manufacturers of more expensive and technically more complex underfloor convectors and non-ferrous convectors of other installation types have shown a steady rise in the first half of 2016, which, for certain companies, reached 40-45%. It is to be expected that the general 2016 results will also confirm this trend.
The reason for the domestic production growth in the segment of complex and expensive convectors is that the main competitors here are goods of EU production, which over the last years have become considerably less price-attractive due to the ruble-to-euro devaluation.
The analysis of the heating devices production dynamics and structure in Russia over the first half of 2016 evidences that despite almost half-decreased imports domestic manufactures have successfully enhanced their production to supply the internal Russian market.
Thus, Russian manufacturers are managing to incrementally occupy the “freed market niche”, vacant due to the slump of imports from China.
Alongside with this, one of the major remaining threats for the heating radiator consumption market is the risk of a considerable decrease in construction in the economy crisis period, which can negatively influence the demand for heating devices to install at construction sites.
Certain data confirm non-exhaustive utilization of production capacities of Russian facilities and the increasing amount of ready goods stored at their warehouses.
In these conditions the APHR will continue to liaise with authorized state bodies to facilitate introducing a set of effective measures aimed at supporting the Russian heating radiator production industry and stimulating import substitution, including enhancing the demand.
The generally difficult situation in the construction sector has brought the heating radiator consumption a bit down in Russia. It is to be hoped that when the pre-crisis construction level is regained, Russian manufacturers of heating devices will receive a new incentive to develop.