Demand for heating appliances has increased China's air-source heat pumps have exploded in exports to Europe

The recent energy shortage in Europe has stimulated the demand for energy-saving and heating appliances.

The first financial reporter learned from the China Household Electrical Appliances Association on September 5 that since the beginning of this year, the number of heating appliances such as electric heaters and electric blankets exported by China to Europe has surged, and at the same time, the use of green energy air source heat pumps has shown explosive growth.

Expanded procurement of heating appliances in Europe

Since 2022, because the impact of the Russian-Ukrainian conflict has continued to ferment, the European energy crisis has intensified, which has brought great trouble to the industry and people's livelihood of many European countries, and many European countries have accelerated the transformation of the energy structure while also launching a national energy conservation campaign to cope with energy shortages.

According to Eurostat, as of July 2022, the annual growth rate of energy price inflation in the EU reached 38.3%, of which the annual growth rate of natural gas and electricity price inflation reached 52.2% and 31.1% respectively. Since August, energy prices have continued to grow at a high rate. According to the European Electricity Exchange, the average price of the European power system on August 30 was 462.1 euros /MWh, an increase of 6 times from the beginning of the year; On August 26, the Dutch TTF benchmark natural gas futures closed at 339.195 euros/MWh, an increase of up to 5 times from the beginning of the year.

The European market has always been the growth engine of China's home appliance exports, and the growth has continued to improve in the past six years, with exports of 29.54 billion US dollars in 2021, an increase of 34.4%, accounting for 28.3% of the total exports of China's home appliance industry. However, since 2022, the European market has significantly declined due to factors such as the Russian-Ukrainian conflict, high inflation, and currency depreciation. According to the data analysis of the General Administration of Customs, the export value of China's home appliance industry to Europe from January to July 2022 was 14.93 billion US dollars, down 9.3%, the largest decline since 2009, and has been showing negative growth since the beginning of the year, which is significantly lower than the overall export performance of China's home appliance industry.

From the perspective of subdivision categories, since 2022, most of the exports of home appliances to Europe have shown a downward trend, and the categories that have grown mainly include air conditioners, electric water heaters, electric heaters, electric blankets, hair dryers, and the cumulative export volume from January to July is 1.99 billion US dollars, 130 million US dollars, 490 million US dollars, 33.4 million US dollars, 160 million US dollars, of which electric blankets lead other categories with a growth rate of 97%. Among them, the export volume of air conditioners, electric water heaters and hair dryers has been flat, while the export volume of electric heaters and electric blankets has expanded rapidly. In addition, the growth trend of the air source heat pump is also very eye-catching, and the overall growth trend continues in 2021.

Relevant people in the Information Consulting Department of the China Household Electrical Appliances Association believe that these high-growth categories have the role of temperature regulation, indicating that European consumers are obviously expanding the procurement of heating products and making reserves for the upcoming winter.

From the perspective of the three main growth categories of electric heaters, electric blankets and air source heat pumps, in terms of electric heaters, Italy, Belgium, the Netherlands, Spain and Germany have strong import demand. In terms of electric blankets, the import demand of various countries has grown at a high speed, and Greece, Italy, Poland, Germany and the Netherlands have doubled their growth. In terms of air source heat pumps, China is currently the main supplier of air source heat pumps in Europe, accounting for 60% of the market; The market in many European countries showed explosive growth, and the amount of air source heat pumps exported by China to Bulgaria, Poland, Italy and Spain in the first half of the year increased by 614%, 373%, 198% and 71% respectively.

The air source heat pump outlet potential is huge

Zhou Nan, secretary general of the Home Appliance Branch of the China Chamber of Commerce for Import and Export of Machinery and Electronics, analyzed to the first financial reporter that the export of electric heating products this year is good, not only for the European market, the growth in the first half of the year is outstanding, and the growth in July is also obvious. In addition, the export of air source heat pumps has increased significantly and is full of potential. Because the air source heat pump is used for heating of water heaters and floor heating, it is highly efficient and energy-saving, and mainly uses air compression to fix heat energy.

The so-called air source heat pump is to use the air as a heat source, transfer the heat in the outdoor air to the indoor air in the winter, and transfer the indoor heat to the outdoor in the summer. The research and production of China's air source heat pump has made great progress in the 1980s, and the current products mainly include household air source heat pump air conditioners, commercial air source heat pump air conditioning units and heat pump hot and cold water systems.

In 2021, China will export about 2 million air source heat pumps to Europe. The industry is optimistic that the export volume of China's air source heat pump products will exceed 10 million units in the future. The United States, Canada, Italy, Germany, the United Kingdom and other European and American countries have introduced strong subsidy policies for the promotion of air source heat pumps. European subsidies for the installation of an air-source heat pump, up to 5,000 euros, are implemented in batches.

Wanhe Electric (002543. SZ) relevant people told the first financial reporter that in the first half of 2022, its air source heat pump water heater sales of 86.499 million yuan, an increase of more than 110% year-on-year, of which the export value of 7.8410 million yuan, an increase of more than 143%.

And midea group (000333. SZ's 2022 semi-annual report also shows that Midea is stepping up efforts to promote the upgrading of heat pump products. Midea's heat pump products started in 2003 and gradually expanded into a series of products integrating heat pump water heaters, pool machine heat pumps, commercial heat pumps, space heating and refrigeration and domestic hot water. According to the data of Industry Online, the export volume of Midea's heat pump products in the first half of 2022 increased by more than 200% year-on-year.

Air source heat pumps are one of the few industries in the cooling and heating industry that has maintained growth in the first half of this year. According to the data provided by Industry Online to the first financial reporter, in the first half of 2022, the sales of China's air source heat pump industry was 7.193 billion yuan, an increase of nearly 30% year-on-year, of which domestic sales were 3.743 billion yuan, an increase of 6.82% year-on-year; Exports amounted to 3.45 billion yuan, an increase of 68.2% year-on-year.

Among the top exporting countries in the first half of 2022, Italy, Poland, Australia and Spain all increased by more than 50% year-on-year. Industry online analysis believes that due to the current global demand for air source heat pump products is growing, it is expected that air source heat pump exports will maintain a growth rate of at least 50% or more throughout 2022. In the export segment, the growth of pool heat pumps will gradually slow down, while the heating market will continue to advance with the promotion of carbon neutrality policies, especially the demand for heat pump heating in the European market is expected to rise sharply this year.

According to the calculation of Cinda Securities, the future European market household heat pump market space will reach 37.73 million units, superimposed update and commercial, industrial heat pump demand, it is expected that the long-term market demand for heat pumps in the European market will exceed 40 million units in the future, and the corresponding market size will exceed 400 billion euros. Zhou Nan said that not only Midea, Wanhe, Gree, Haier, Hisense and many other home appliance companies are increasing the export business of air source heat pumps.