It became hot on the heating systems market – Newspaper Kommersant No. 162 (7363) of 09/05/2022

Due to the strengthening of the ruble, Russian manufacturers of heating systems began to lose competition in the domestic market to companies from China and Turkey, whose products are 18-22% cheaper. Local companies, citing rising costs, argue that they have almost no room for price maneuver. Experts, however, are sure of the opposite: imported components also fell in price due to exchange rate fluctuations. Developers expect that the situation will lead to an increase in the availability of heating systems. However, more than half of the manufacturers warn that if the current market situation persists, they will have to cut production volumes.

At the disposal of Kommersant were the results of a survey by the Eurasian Heating Systems Market Association (EURAROS), in which 23 major manufacturers of such equipment took part. According to the document, 57% of companies fear that they will have to reduce production volumes due to cheaper imported heating equipment against the backdrop of a stronger ruble. Another 14.4% of respondents said that price competition will force them to optimize costs at the expense of quality. Only 28.6% of survey participants believe that the reduction in import prices will not affect the company’s activities.

According to EURAROS, imported radiators, including those from China and Turkey, have become cheaper in rubles by about 18-22% due to the depreciation of the dollar compared to the end of 2021, while prices for Russian products have not changed. Ruterm CEO (manufacturer of panel radiators) Vladimir Chefranov says that local companies cannot reduce prices, in particular, because of the high cost of rolled metal, one of which costs $961 per ton in Russia, and $745 per ton in Turkey. “Because of the strong ruble, Russian products are uncompetitive,” emphasizes Kommersant’s interlocutor on the market.

Some players have already experienced a reduction in sales volumes. The commercial director of Terminus (manufacturer of heated towel rails) Marat Zakerov notes that compared to 2021, the company’s sales have decreased. However, he hopes that by the end of 2022, the gap in indicators will be minimal.

“Excessive strengthening of the ruble and the resulting decrease in the competitiveness of products of Russian manufacturers in the domestic market may lead to a reduction in production volumes,” warns Alexander Maslov, chairman of the EURAROS expert council. According to the association’s survey, 29% of companies expect they will have to cut production by 20%, and another 58% of companies expect to cut production by 15%. In addition, 42.8% of respondents admit that they will have to optimize the number of employees in the event of increased competitive pressure from manufacturers from abroad.

Stabilization of the market for the production of heating systems, according to the forecasts of Marat Zakerov, will occur no earlier than next year, and the recovery of growth rates will occur only in 2024.

At the same time, Smart Engineers General Director Hussein Pliev notes that Russian heating equipment consists of imported components, so the cost of production, on the contrary, should decrease, which means that there are prerequisites for increasing the profitability of the business of Russian manufacturers.

Sergey Korovin, General Director of JSC Rettig Varme Rus (manufacturer of radiators, convectors, etc.), confirms that due to lower prices for materials and an increase in the share of localization of products, the cost of production has decreased. Increasing the availability of equipment will lead to increased competition in the market, which will have a positive impact on the provision of heating systems for the construction industry, Mr. Pliev expects.

According to a Kommersant source in the market, government contractors must first of all purchase Russian-made equipment, but many ignore this, purchasing cheaper Chinese radiators. The developers themselves – in particular, FSK Group of Companies and Granel – assure that they mainly buy heating systems from local manufacturers. According to Maxim Vlasov, heating and ventilation engineer at BEL Development, the purchase of imported equipment is only profitable when purchased directly from manufacturers.

Daria Andrianova