Brazil Speeds Past China in Medium-Voltage Drives

Source: ControlDesign.com

Apr 10, 2012

Growth in Brazil's market for medium-voltage drives will outpace the market in China by 2% over the next three years, with revenue growth forecast at 18.5% annually in Brazil from 2011 to 2014, according to two new studies by IMS Research. However, China's market is still considerably larger, accounting for 28% of the world's drive consumption, compared with just 3% for Brazil.

The recent high growth in Brazil is driven predominately by oil and gas, and mining expansion, as well as projects for infrastructure improvement. Brazil's state-run energy company's plan to achieve daily production of 500,000 barrels of oil from the Tupi field discovered off the coast of Brazil by 2020 is one of the many projects propelling growth.

The two countries are intertwined, with China topping the list of Brazil's export countries, and the Brazilian market is increasingly dependent on China's demand for iron concentrate and crude petroleum. China has also increased its foreign direct investment in Brazil, with totals reaching almost $10 billion in 2010 and 2011, focused largely on the oil and gas, and mining sectors.

"With China's need for raw materials fueling sales of medium-voltage drives in Brazil, high forecasted growth for this market will depend in part on China's future economic health," said Michelle Figgs, analyst for IMS Research. The International Monetary Fund predicts that China's GDP growth will remain higher than any other country during the next few years, with economic expansion forecast at 9.4% in 2011 and 8.9% in 2012, Figgs added.

Unlike Brazil, growth in the Chinese medium-voltage drive market is slowing. Since June 2011, the Chinese government has tightened monetary policies on bank loans, 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 because investments in many industries slowed quickly.

Still, growth in the Chinese market will remain strong because of policies implemented for motor efficiency and continued government support of energy-saving renovations in various industries including mining, metals, and oil and gas. Also, resumed investments are expected by the end of 2012 for large-scale projects.

Average annual revenue growth in the Chinese market for medium-voltage drives is forecast at 16.6% from 2010 to 2015.

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