Chinese firms see rocketing orders for heaters from Europe ahead of winter
Producers, traders work in full swing to deliver much-needed products to EU market ahead of an anticipated ‘expensive’ chilly winter
Published: Sep 26, 2022 07:50 PM
Photo: VCG

Photo: VCG

Chinese producers and traders are working around the clock to deliver the much needed heating equipment to European clients, with some seeing orders jump by tenfold year-on-year as consumers across EU countries scramble to deal with possible energy rationing ahead of the upcoming winter.

Due to the lingering geopolitical tensions that have placed many people in Europe at the mercy of high gas prices, demand for electric heating devices that are cost-efficient has skyrocketed with corresponding Chinese products ranging from heat pumps to electric blankets gained immediate foothold across the continent. At the same time, producers in China, the major supplier of the world heating devices, have worked around the clock to deal with skyrocketing orders in what some described as an "unprecedented" situation in terms of the sheer market demand.

Euro area annual inflation came to 9.1 percent in August, up from 8.9 percent in July, while energy price inflation, the dominant component of overall inflation, remained elevated, at 38.3 percent, according to Eurostat's flash estimate, indicating the growing severity of the situation, and mirroring the drive behind the explosive demand for heating products.

Driven by this trend, several industry insiders that the Global Times reached on Monday said that their orders had jumped by at least 100 percent, and some even at tenfold, while new orders have piled due to the sudden demand.

Data that the Global Times gained from the China Chamber of Commerce for Import and Export of Machinery and Electronic Products (CCCME) on Monday shows that China's heating devices to Europe amounted to $497.53 billion from January to August, a year-on-year increase of 14.35 percent.

In August alone, 22.54 billion units of corresponding products were delivered to the European market, with the total value of around $70 billion, the data read.

From January to August, the export rate to most of the European countries witnessed double-digit growth with exports to Italy jumping by 74.48 percent year-on-year. Other countries like Latvia saw the biggest increase, with number skyrocketing by 254.44 percent, according to the chamber.

At present, the acute demand for electric heaters across Europe is obvious, and has been largely determined by the price surge of natural gas, Zhou Nan, Secretary General of Household Electric Appliances Branch under CCCME told the Global Times on Monday, adding that the heat source shift from fossil energy to electricity in the region has played a key role.

"We have received reports from factories in Europe that their cost for consuming natural gas has shot up by almost 10 fold," said Zhou, noting that it had directly affected residential heating costs.

Working around the clock

This year's European orders have been almost unprecedented, with many orders placed in March and the transaction rate for the corresponding products has been high, several business insiders told the Global Times.

The order volume of the largest customer in previous years was about 900,000 units at a maximum, while this year the number jumped up to 2 million for a single order, Luo Lanxian, a trader based in Yiwu, the "world's supermarket," in East China's Zhejiang Province, told the Global Times on Monday.

Electric blankets, hand warmers and rubber hot water bottles are all popular products for the European market. 

Electric heating products must meet safety and stability standards to avoid fire risk. Chinese products have advantages in this regard while also being more affordable, which explains why they are widely used by European customers, industry insiders said.

Because of the strong demand, some new orders have to wait for months before reaching end users, the Global Times learned.

"If you place an order now, it will need to wait until October 20 for shipment, and it will take at least one month for transportation," Luo said, which means that it will not get to the hands of European customers until late November or early December.

To save the time, some traders are using the China-Europe freight train to deliver goods which, although is in no comparison with ocean shipping in terms of carrying capacity, takes about 18 days from Yiwu to Hamburg in Germany, while sea transportation takes about one month and a half.

Most of the orders have been delivered already, except some new orders from Spain, Italy and Poland, Luo said.

Producers in Cixi, Zhejiang Province, one of the heater production bases in China, with its export volume accounting for 30 percent of the whole market share in China, found their busy season is longer than previous years.

Graphic: Tang Tengfei/GT

Graphic: Tang Tengfei/GT

Longer peak season

Different from the situation where the peak production season of electric heaters ended in mid-September in previous years, companies have been busy making products this year to cope with the replenishment orders of customers in Europe.

A manager surnamed Lu, a large heating equipment supplier based in Cixi told the Global Times on Monday that they have noticed the clear trend of increased orders from Europe this year and they have been working 24 hours a day, seven days a week with three working shifts to ensure the much-needed goods can be delivered to European clients as soon as possible.

While Lu's company is expanding production lines to meet the extra demand, he admitted that it can be difficult to take more orders, given the strict schedule for new orders while expanding production capacity and goods delivery take time.

From January to August, Cixi's heater exports totaled 3.35 billion yuan ($470 million), a year-on-year increase of 26.3 percent, of which 1.53 billion yuan was exported to the EU, a year-on-year increase of 55.2 percent, data with Cixi Customs shows, according to media reports.

In comparison, the sales season for heaters exported to the EU is expected to be extended by about a month.

The jump in orders has further reflected China's dominant position in global industrial chain, and shows that China's manufacturing industry has the ability to quickly respond to surging demand in the global market. It is impossible to decouple China from the world, Zhou said.