"Midea Addresses European Sales Surge and Analyzes Upstream-Downstream 'Temperature Gap' Amid Industry Shifts"

Industry Overview: The “Temperature Gap” Between Booming Finished Products and Contracting Upstream Materials
In mid-2026, China’s air conditioner industry chain is showing a highly tense “hot and cold intertwined” state. On one hand, overseas heatwaves combined with product innovation have driven China’s air conditioner exports to record highs; on the other hand, the operating rate of upstream copper pipe & tube enterprises has trended downward for two consecutive months in May and June. This temperature gap between upstream and downstream data not only exposes the short-term pains of high inventory and high costs in the current industry chain, but also reveals the profound changes brought by the transformation of export product structure on raw material consumption.Midea Group responded to the media today, saying, "The heatwave has significantly driven sales growth, especially the PortaSplit air conditioner, which has sold out in some sales channels."

Upstream Copper Pipe & Tube: High Cost Pressure and Divergent Exports, Operating Rate on a Downward Trajectory
According to SMM data, production momentum at domestic copper pipe & tube enterprises has retreated from highs, with overall stockpiling attitudes turning cautious:
- Operating rate declined significantly in May: In May, the operating rate of copper pipe & tube enterprises was 72.26%, down 8.01 ppt MoM and down 9.50 ppt YoY. The core factor behind the weakening operating rate is the persistently elevated prices of copper and plastic raw materials, which have severely squeezed profit margins across the entire industry chain, causing downstream purchases and stockpiling to become more conservative.
- Dual drag from geopolitics and regional demand: Geopolitical conflicts led to a notable weakening of export orders to the Middle East; meanwhile, the traditional European split-type air conditioner market remained sluggish during the traditional pre-summer stockpiling period around May, slowing traditional copper pipe & tube export orders.
- Expectations continue to weaken in June: Entering June, the operating rate of copper pipe & tube enterprises is expected to further decline to 69.01%, down 3.25 ppt MoM and down 4.64 ppt YoY, with overall production falling below the 70% benchmark level.

 Downstream Finished Products: European Exports Hit Record High, with All Subcategories Surging
In contrast to the sluggishness of upstream copper pipe & tube raw materials, the overseas end-user consumer market (especially Europe) experienced explosive growth in Q2:
- Macro export data hit an all-time high: According to data from the General Administration of Customs of China, in H1 2026, China’s exports of air conditioners to the EU reached $3.76 billion, up 43.2% YoY, setting a new record high for the same period. The market share of Chinese brands in Europe jumped from 27% in 2023 to 41%, making them the largest source of air conditioner supply in Europe for the first time. - Western European core markets doubled in growth: In the first five months, China's air conditioner export value to three Western European countries—France, the Netherlands, and Belgium—all doubled YoY; South-Central European countries such as Spain and Germany also achieved substantial double-digit growth.
- Top-tier players reaped substantial gains: * Midea Group: In H1, overall air conditioner sales in Western European markets such as Germany, France, Spain, and the UK rose by over 70% YoY.
  - Gree Electric: In some European countries (mainly France, Italy, and Spain), due to high temperatures, actual air conditioner sales from January to June increased by over 40% YoY.
  - Market resonance: Strong export performance directly transmitted to the capital market. On June 29, the home appliance sector overall outperformed the broader market. Midea Group's A-shares (up nearly 3%) and H-shares (surging over 5%) strengthened simultaneously, while Gree Electric (up over 2%) and Hisense Home Appliances (up nearly 5%) delivered impressive performances.

 In-Depth Logic Analysis: How to Understand the "Hot and Cold Mismatch" Between Upstream and Downstream?
The seemingly contradictory trends of "hot" finished product export data and "cooling" copper pipe & tube operating rates actually have deeper industrial logic:
1. Category structural changes leading to a decline in "copper consumption per unit" In European market growth, installation-free portable air conditioners (such as the PortaSplit model promoted by domestic producers, whose half-year sales in Germany exceeded 60,000 units) saw export growth of over 70% YoY, making it the fastest-growing niche segment. A key feature of portable and mobile air conditioners is that they do not require lengthy external connecting copper pipe & tube, and some models have more compact internal heat exchanger designs. This shift in product structure directly results in a situation where "finished product export value surges but provides limited boost to bulk high-consumption copper pipe & tube." This also corresponds to an emerging trend upstream—orders for high-performance copper-nickel alloy tubes are increasing, and the downtrend in copper consumption per unit is gradually becoming evident.
2. Overall decline in domestic sales dragging down the broader market The main demand for copper pipe & tube enterprises still relies on the massive domestic air conditioner production lines for domestic sales. Data shows that in June, total household air conditioner production schedules fell sharply by 18.9% YoY. Among which, domestic sales production schedules plunged 23.3% YoY due to the dual pressures of high channel inventory and raw material costs, with producers actively controlling output and destocking. This deep adjustment in domestic production schedules completely offsets and overwhelms the partial benefits brought by exports in terms of total volume. 3. Staged Time Lag in the Shipment Cycle The surge in Europe's import value in H1 corresponded to concentrated production scheduling and early shipments by Chinese factories in Q1 and early Q2. From May to June, the concentrated production cycle for summer exports to the Northern Hemisphere had largely concluded, and export production scheduling fell under pressure as overseas demand momentum gradually entered a digestion phase, causing upstream copper pipe & tube operating rates to exhibit a seasonal pullback.

 Market Outlook: Extreme Weather Becomes the Biggest Catalyst, with the Secondary Maintenance Market Stepping In
Although both the copper pipe & tube operating rate and downstream production schedule data hit bottom in June, the industry chain continued to build rebound momentum:
- Expectations of extreme heat are expected to accelerate destocking: The El Niño phenomenon this year could bring more extreme hot weather than expected. Once end-user retail sales surge in major consumer markets like China, Europe, and the U.S., elevated air conditioning inventories will be quickly digested, potentially triggering phased replenishment orders from whole-unit manufacturers at the end of Q3.
- Orders for maintenance pipes are seeing seasonal improvement: As the peak summer heat arrives, high-frequency and overload operation of air conditioners will drive maintenance demand in the existing market. Although the operating rate for traditional air conditioner copper pipe & tube is expected to remain on a slight downward trend subsequently, orders for air conditioner maintenance pipes in the secondary market will relatively improve, providing a crucial survival cushion for upstream copper pipe & tube enterprises.