IndexBox has just published a new report: ‘World – Electrical Transformers with Liquid Dielectric, of Power Handling Capacity over 10000 kVA – Market Analysis, Forecast, Size, Trends and Insights’. Here is a summary of the report’s key findings.

After two years of growth, the global market for electrical transformers with liquid dielectric, of power handling capacity over 10000 kVA decreased by -18.6% to $14.5B in 2019.

The countries with the highest volumes of consumption of electrical transformers with liquid dielectric, of power handling capacity over 10000 kVA in 2019 were China (4.5K units), Pakistan (2.4K units) and the U.S. (2.2K units), together comprising 26% of global consumption (IndexBox estimates).

In value terms, China ($1.5B) led the market, alone. The second position in the ranking was occupied by the U.S. ($703M). It was followed by India.

Transformers and power distribution equipment tend to follow distributional and industrial electrical utility construction, the creation of new communities, and a replacement cycle. Therefore, the rising demand for transformers will also be shaped by both the residential construction sector and industrial production alike, which are conditioned by rising population and urbanization, particularly in Asia, capital investment, and the expansion of transport and telecom infrastructure; overall, those factors reflect the global GDP growth.

Until 2020, the global economy has been developing steadily for five years, although at a slower pace than in the previous decade. The slowdown in global economic growth was caused by increased political uncertainty in the world and trade wars between the United States and China. According to the World Bank outlook from January 2020, the global economy was expected to pick up the growth momentum and increase from +2.5% to +2.7% per year in the medium term.

In early 2020, however, the global economy entered a period of crisis caused by the outbreak of the COVID-19 pandemic. In order to battle the spread of the virus, most countries in the world implemented quarantine measures that put on halt production and transport activity.

The combination of those factors disrupts economic growth heavily throughout the world. According to World Bank forecasts, despite the gradual relaxing of restrictive measures and unprecedented government support in countries that faced the pandemic in early 2020, the annual decline of global GDP could amount to -4.3%, which is the deepest global recession being seen over the past eight decades.

In Asian countries, especially China, which faced the pandemic earlier than others, the epidemic situation improved earlier, with the quarantine measures largely relaxed, and the economy is gradually recovering from the forced outage. Thus, in China, by the end of 2020, an increase of 2.0% is expected (while a year earlier it was 6.1%), and in general in Southeast Asia in 2020, an increase of 0.9% is expected. In the medium term, it is assumed that the economy will gradually recover over several years as the restrictions are finally lifted.

The U.S., meanwhile, is struggling with a drastic short-term recession, with the expected contraction of GDP of approx. -3.6% in 2020, as the hit of the pandemic was harder than expected, and unemployment soared due to the shutdown and social isolation. The pandemic also led to a sharp drop in oil prices, because the demand for fuel dropped dramatically during the shutdown.

According to the European Commission, the EU economy is forecasted to drop by -7.4% in 2020 on the backdrop of the pandemic, hampered by the lockdown, a drop in consumer spending and decreased investment. Russia is also struggling with a sensitive short-term recession, with the expected contraction of GDP of approx. -4.0% in 2020. Current short-term indicators show that the plunge in the first half of 2020 was really deep, but a gradual recovery starts in the third quarter of 2020.

Both the construction and industrial sectors have proven vulnerable to the pandemic. Thus, the above economic prerequisites will have the most negative impact on the expansion of new residential and non-residential construction projects, thereby hampering the demand for electricity. Due to quarantine measures, construction projects were paused, and the drop in incomes of the population makes mortgage loans less affordable.

In addition, the reduced capital investment may lead to the postponement of plans for the building of new infrastructural and industrial facilities. The reduction of capital investments and the shortage in consumer spending also hamper the industrial sector, and metallurgy in particular, which is, on the one hand, an energy-intensive industry, and on the other hand, is also affected severely by the reduced demand for cars and other transport equipment.

Moreover, the disruption of established international supply chains between electric transformer producers and consumers due to asynchronous quarantine measures and restricted transport activity also hampers the market growth.

Taking into account the above, it is expected that in 2020, global consumption of electrical transformers should decline slightly against 2019. In the medium term, as the global economy recovers from the effects of the pandemic, the market is expected to grow gradually. Overall, market performance is forecast to pursue a slightly upward trend over the next decade, expanding with an anticipated CAGR of +0.4% for the period from 2019 to 2030, which is projected to bring the market volume to 163M units by the end of 2030.

Global Imports

Global imports of electrical transformers with liquid dielectric, of power handling capacity over 10000 kVA totaled 16K units in 2019, leveling off at the previous year’s figure. Global imports peaked at 18K units in 2013; however, from 2014 to 2019, imports stood at a somewhat lower figure. In value terms, imports of electrical transformers with liquid dielectric, of power handling capacity over 10000 kVA dropped to $3.4B (IndexBox estimates) in 2019. I

Imports by Country

The U.S. (2.4K units) and Pakistan (2.4K units) represented roughly 30% of total imports of electrical transformers with liquid dielectric, of power handling capacity over 10000 kVA in 2019. Saudi Arabia (862 units) occupied a 5.3% share (based on tonnes) of total imports, which put it in second place, followed by Sweden (4.7%). Malaysia (597 units), the United Arab Emirates (428 units), Norway (411 units), India (395 units), China (346 units), Chile (323 units), Singapore (281 units), Greece (274 units) and Canada (259 units) followed a long way behind the leaders.

From 2013 to 2019, the most notable rate of growth in terms of purchases, amongst the main importing countries, was attained by Pakistan, while imports for the other global leaders experienced more modest paces of growth.

In value terms, the U.S. ($773M) constitutes the largest market for imported electrical transformers with liquid dielectric, of power handling capacity over 10000 kVA worldwide, comprising 23% of global imports. The second position in the ranking was occupied by Pakistan ($283M), with an 8.3% share of global imports. It was followed by the United Arab Emirates, with a 3.2% share.

Source: IndexBox AI Platform