Impacts of Pandemic Paid Off in Mar on Household Air Conditioning

SHANGHAI, Mar 31 - According to the latest production and sales data, 9.62 million units of domestic air conditioners were produced in February 2022, up 10.39% year-on-year; and 9.69 million units were sold, up 10.59% year-on-year. Among them, 3,839,700 units were for domestic sales, up 4.06% year-on-year, and 5,846,700 units were exported, up 15.34% year-on-year.

Due to the impacts from Spring Festival holiday and the financial settlements, although there were short-term fluctuations in the single-month data for January and February, the comprehensive production and sales in the first two months of 2022 recorded a drop of 1.3% and a gain of 0.97% YoY respectively, with domestic sales down 4.36% and exports up 4.71%. Due to the relatively steady performance of the retail end during this period, coupled with the continued rise in raw material prices, enterprises were more cautious in their production, and shipments were basically flat compared with last year.

However, against the backdrop of growing raw material prices, the air conditioning terminal retail performance has been less optimistic so far in March. However, March is traditionally the peak production season and manufacturers have been actively stocking up, with overall production increasing slightly in March, including a 4.9% increase in production for domestic market compared to the same period last year, and a 105% increase from February.

The export market remains relatively optimistic. As is the traditional high for export, the sector is expected to continue to grow in the first quarter, but it does not rule out the possibility of uneven performance between enterprises in the second quarter.

Enterprises that have the advantage of shipping space resources such as contract cabins and focus on their own brands will be better positioned in the export market. In March, the production for export reached a new record high, with a 13.7% increase over the same period last year despite a high base in 2021.

Nonetheless, pressure on export should not be underestimated. In addition to rising prices of raw materials, shipping costs are also rising. As of March 21, the exchange rate of onshore RMB against the U.S. dollar rose more than 50 points after opening, and rose above the 6.36 mark. In order to cope with the cost pressure, the current exported air conditioners, especially to the North American market, are using more aluminium to replace copper products. Meanwhile, features like thinner diameter and lightweight of copper tubes are also the focuses of innovation in air conditioning companies.

Furthermore, in March, many places in China were locked down because of the repeating pandemic. According to ChinaIOL, some manufacturers in Liaoning, Shandong, Guangdong and other places were forced to be shut down and logistics was also disrupted, which will affect the production of downstream air conditioning enterprises if the lockdown lasts for a long period of time.