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MV motor prices fall for the first time in ‘more than a decade’

29 September, 2016

Prices of medium-voltage motors are falling for the first time in more than a decade, according to the market analyst, IHS Markit, which expects average selling prices for MV motors to drop by 2.3% year-on-year by the end of 2016. It attributes the fall largely to lower materials prices, especially for copper, steel and wire cable.

In addition, demand for MV motors has been slipping. Because of the global slowdown in capital expenditure, manufacturers are warehousing surplus motors, and bidding low to win projects, with the hope of winning repeat business. The downturn in commodity prices has also contributed to the erosion of average selling prices (ASPs) for MV motors.

According to IHS, constrained capital expenditures is the main reason for increased supplier inventory and, as a result, falling ASPs. Slowing growth in China – which accounts for a third of the global MV motors market – has left suppliers looking for new opportunities to off-load inventory. Sluggish growth, coupled with the negative effects of Brexit on European investment, is compounding the problem, leaving suppliers with little choice but to cut prices to win what projects are available.

Although prices will remain subdued in the near term, a low point may be in sight, with commodity prices and capital expenditure spending expected to increase, albeit slightly, during 2017 and 2018. As the global oil and gas industries rebound – together accounting for more than 20% of the MV motors market – so will the average selling price of MV motors in the coming years.

Predicted changes in average selling prices of MV motors in global and regional markets (percent)
Source: IHS

IHS Markit’s Medium Voltage Motors Intelligence Service forecasts a return to growth for average selling prices in 2018, with a projected increase of 1%.




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