Mohammed Qadri, Sales Manager, MENA, Danfoss, says that a portion of the compressors market, which belongs to the OEM sector, has been witnessing a steady drop in demand. Excluding the after-sales process, the market for compressors, widely characterised as the heart of any air conditioning or refrigeration system, ranges from approximately USD 140 million to USD 150 million. “If we take the after-sales process into account, the compressors market in the OEM sector can be estimated at USD 250 million,” he says.

Mohammed Qadri

Qadri says that a key factor influencing the market is the financial climate in the region. “The financial climate in the region is not steady,” Qadri says, and adds that this has led to a drop in the demand for compressors. Percentage-wise, Qadri says, the region is witnessing a 30% drop in annual demand for compressors, when compared to the years 2015 and 2016. Adding to that Seeraj Rajan, Sales Manager, Ampex Engineering Services, says that the market is saturated. While the population has been increasing, he says, the demand seems to be decreasing.

Speaking specifically about the refrigeration market – and that, too, only in the UAE – Seeraj Rajan, Sales Manager, Ampex Engineering Services, says that the value has dropped. “Overall, when you compare the market to the last three years, the value has dropped,” he says. The year 2018 was a confused one, where the numbers were at an all-time low. But in comparison, he adds, 2019 has shown better prospects as compared to 2018. Rajan’s reading of the market – as showing better prospects in 2019 – finds resonance with Anil Kumar, General Manager, Mustafa Sultan Electronics & Mustafa Sultan Refrigeration & Air Conditioning Services, who highlights a positive trend. Earlier, he says, people would repair their compressors locally.

Seeraj Rajan

That trend, he adds, seems to be fading away. Instead, with the production of rotary compressors, people tend to spend less time on repairing and are more likely to buy rotary compressors. “We see other improved factors in compressors today – in terms of energy efficiency,over-heating in compressors, and an improvement in the overall life-span of a compressor,” Kumar says. Lionel Audouy, Global Platform Director – Multi Cylinders, Tecumseh Products Company, says how his company is gaining momentum in the Middle East. He attributes the momentum to the company’s variable-speed technology and environmentally friendly refrigerants, combined with a wide product offering in the systems as well as in compressors, which he adds, are addressing the needs with regard to its application in the Middle East market.

Anil Kumar

Audouy adds that the latest in compressor technology is a connected platform technology. “It provides variable-capacity cooling, intelligent control, energy management and heat transfer,” he says. Design engineers from OEM companies, he adds, use the company’s IntelliCOOL technology platform to develop commercial refrigeration systems that are compact, quiet and deliver superior performance. Additionally, he says, systems that use variable-speed technology have optimised energy savings through an adaptive defrost and smart lighting control. They have optimised system performance through rapid temperature pull-down, connectivity and reliability through onboard communications and alarms, he says. “As more and more commercial refrigeration OEM companies in the Middle East develop their systems with variable-speed compressors, contractors and end-users will greatly benefit from the technology in their day-to-day life,” he says. Kumar points to the Internet of Things and highlights how it is also a key disruptor in the space. The microprocessor, for instance, he says is the next new thing that is being introduced. Customers today, he adds, are open to technological advancements and to technology, as long as they don’t have to pay more.

Lionel Audouy

While the technological advances make for pleasing reading, a key factor that seems to be having an influence on the compressors market and its stakeholders is the looming 2028 deadline for Article 5 Group 2 countries to comply with the HFC phase-down in the GCC region. Elaborating on the action points in the post-Kigali scenario, Kumar says that any development or an improvement in product happens in phases. But one of the factors that suppliers and distributors cannot ignore is that each time there is a phase-out or a phase-down, the stocks purchased will remain at the dealer point and the warehouses of the distributor. “The stocks cannot be sold after the cut-off date,” Kumar says. “As a result, they will have to be destroyed.” Elaborating, he says that the distributor takes a hit each time a phase-out happens. “As a distributor, we have a limited role at the manufacturer level, and whenever the law is implemented, the compliance with the gas will definitely be the responsibility of the manufacturer,” he adds.

Rajan says the market needs a push with regard to the regulation of refrigerants. “Regulations are pretty slow in the region,” he says. “HCFCs, such as R-22, are still available in the market, and we are yet to know the actual phase-out date for R-22 in the UAE; only then can we begin to think of the phase-out of HFCs.” A challenge, he says, is the ambient temperature and competition in the region. “Many new blended refrigerants have higher pressure and temperature glide,” Rajan says. “This makes operations complicated.” Qadri, too, highlights a challenge with regard to new refrigerants. He says: “We really need some regulation. The industry, as a whole, needs to spend time testing and working on new refrigerants.” As the sales team, he says, our main concern is to be an active channel between OEMs and the technical team. “By having the right feedback and working to have the right solution, as a compressor manufacturer, we need to give our knowledge and information to the OEMs,” he says. Additionally, a frequent phase-in and phase-out of refrigerants must be avoided. Kumar says that when a refrigerant changes, everything has to change with it. When there is a phase-out, after the cut-off period, there should be a minimum one year cooling period for suppliers to clear their stocks, he says. “In addition, the product-wise approvals and certifications must be done by government agencies and must be done free of cost,” Kumar says. For every change in model, we have to go for a certification – it costs money, he says, and adds, it is a roadblock and can be mind-boggling, sometimes.

And then, there is the issue of drop-in refrigerants and compressor compatibility. Elaborating on this, Qadri says: “Drop-in refrigerants are mainly for the replacement market, where you need to change the old compressor with a new one after failure.”  It depends on the old refrigerant and the new one, so we can drop in R-452b in R-410a with lesser efficiency for the unit, but you can’t use R-32. Audouy says that refrigerants are flammable and have significant thermodynamic modifications – they cannot be used as drop-ins. And as a compressor manufacturer, we recommend our customers replace and use new products. Rajan says that the temperature glide involving new-generation refrigerants can add pressure on the technician while handling these systems, as even a small amount of leakage can change the composition or the properties.

By way of citing additional challenges in the compressors market, Qadri says that fake and cheaper options of products in a price-oriented market constitute a major roadblock for progress. “This trend is not only in the region but also in Jordan, Egypt and in most markets today,” he says. But again, it all depends on the customer. “With our company,” he says, “customers are loyal, as they are big brands, who care about their reputation.” In a price-oriented market, Qadri adds, the only differentiator is customer-awareness. Kumar echoes Qadri and says that low-cost  compressors and copies of major brands often tend to mislead customers. “Customer awareness is essential, and when it comes to air conditioners, we hope that they are prudent,” he says.

Citing another challenge, Audouy points to the proliferation of refrigeration. “Players often recommend their own solutions, and we have on the market many solutions with very limited differences,” he says. As a compressor manufacturer, he says, each solution needs to be approved and must involve consumer resources. Our actions are to promote the best solutions for our customers and the market. Rajan highlights that the Middle East has always remained a good market for the refrigeration industry. He says that though there has been a slowdown, demand is expected in the coming years. Even retrofitting can be a good business in the future, with regulations getting strict. “Manufacturers and distributors like us,” he says, “will always be under pressure to maintain good quality at a reasonable price, hence securing payments.”