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NBS: Fall in China air-con output slows slightly in April

China’s production of air-conditioners dropped by 24.8% on year over the first four months of 2020, though the pace of the decline slowed marginally from the 27.9% decrease seen during January-March, according to the latest data from China’s National Bureau of Statistics (NBS). Demand for the units has not fully returned, and concerns about retreating global demand and hovering high stocks saw makers continue to restrain production, market sources said.
China’s air-conditioner output amounted to 55.8 million units over January-April, the statistics showed. In April alone, output declined by 17.3% on year to 19.2 million units.

“Online sales of air-conditioners witnessed significant rises last month as the frequent promotions in online shops attracted more consumers, and people chose this new convenient selling pattern,” a Beijing-based market analyst said. “The prices of products in both online and offline sales channels have largely declined as producers want to boost sales amid the sluggish demand,” he added.

In April, air-conditioner sales in the domestic e-commerce market inched up 3.4% on year to 2.2 million units, according to data from All View Cloud, a platform collecting and analyzing statistics of some consumer products including home appliances. The rise in online air-con sales probably shouldn’t surprise as average sales prices were down 20.8% on year to an average of Yuan 2,390/unit ($336.5/unit), All View Cloud indicated, while sales in the offline market tumbled 26.6% on year to 2.8 million units where the average sales price had decreased by only 7.1% on year to Yuan 3,492/unit.

“Besides, new, tighter efficiency standards for air-conditioners will very likely take effect in July as scheduled, thus manufacturers need to clear out the remaining high stocks,” the analyst explained.

As of late April, total air-conditioner stocks held by manufacturers and retailers stayed high at 15.1 million units, being up 21.6% on year, according to data from Chinaiol, another a platform focusing on the home appliance industry.

Production of major consumer appliances

 

Air-conditioner

Refrigerator

Television

Washing machine

April

19.2

7.1

14.8

5.6

YOY (%)

-17.3

-3.3

-5.4

-10

January-April

55.8

20.5

51.9

19.8

YOY (%)

-24.8

-16.5

-10

-11.1

Unit: million units
Source: NBS

Amid the softening of actual demand, central and local government authorities in China have introduced stimulus policies to boost consumption of new home appliances via “old-for-new” replacement schemes, Mysteel Global noted. 

For example, over May 1-December 31 residents registered in rural districts in South China’s Guangdong province can enjoy a refund of no less than 10% off the purchase price of a home appliance, with the rebate shared equally between appliance makers and the local government. Guangdong has prepared Yuan 580 million for this program, Mysteel Global understands. 

However, some producers remain pessimistic about market trends in the near term and are opting to ease back on production in the next two months, according to a Shanghai-based market insider. “Domestic demand has softened and exports for the year’s second half are also facing challenges amid the COVID-19 pandemic and uncertainties in Sino-US trade relations,” he explained.

Written by Anna Wu, wub@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com