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Brazil outstrips China as fastest-growing MV drives market

03 March, 2012

The Brazilian market for medium-voltage drives will grow faster than the Chinese market over the next three years, with revenue forecast to grow by 18.5% a year from 2011 to 2014 – 2% faster than in China – according to two new studies from IMS Research.

However, the Chinese demand for MV drives is still much larger than Brazil’s, with the Chinese market representing 28% of the global consumption of MV drives, compared to Brazil’s 3%.

Brazil’s rapid expansion is being driven largely by expansion in the oil, gas and mining sectors, as well as by projects for infrastructure improvement. For example, the state-run energy company is aiming to produce 500,000 barrels of oil a day from the Tupi field, off the Brazilian coast, by 2020.
Much of the Brazilian growth is being fuelled by China’s demand for iron concentrate and crude petroleum. China is now Brazil’s largest export market, and China has also increased its investment in Brazil to almost $10bn a year, focused largely on the oil, gas and mining sectors.
“With China’s need for raw materials fuelling sales of MV drives in Brazil, the high forecasted growth for this market will depend, in part, on China’s future economic health,” explains IMS analyst, Michelle Figgs. “The good news for drives suppliers is that the International Monetary Fund predicts that growth of China’s GDP will remain higher than for any other country during the next few years, with economic expansion forecast to be 8.9% in 2012.”
The slow-down in China’s domestic MV drives market is due, in part, to the government’s tighter monetary policies on bank loans, implemented in June 2011, which has held up many large projects, such as high-speed railways, city metros, highways, and factory renovation projects. Both end-users and machine-builders are facing financial strain from these policies as investments in many industries have slowed down.
However, other Chinese policies – on motor efficiencies, for example – and continued government support for energy-saving renovations in industries including mining, metals, oil and gas, are helping to drive growth in the MV drives market. Also, large-scale projects are expected to resume by the end of 2012. IMS forecasts that the average annual revenue growth in the Chinese MV drives market will be 16.6% from 2010–2015.

♦  In another recent report on the global market for MV AC drives, ARC Advisory Group says that while large project orders helped maintain the market in 2009, it also resulted in low growth in 2010 compared to other automation products. It adds that the market experienced higher growth in 2011 compared to a sluggish 2010.

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