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IMS Reports Upswing for Latin American Motor Market
September 3, 2013
The Latin American market for low-voltage AC & DC motor drives is forecast to expand to $595 million in 2017, rising at a compound annual growth rate (CAGR) of 7.1 percent from $420 million in 2012.
Latin American low-voltage AC & DC motor drive sales grew at double-digit rates in 2010 and 2011, according to a recently released report entitled “The Latin American Market for Low Voltage AC & DC Motor Drives” by IMS Research, now part of IHS Inc. However, drive sales in 2012 declined by 1 percent, and growth ahead won’t be as expansive.
“The years of double-digit growth rates for Latin America are most likely a thing of the past,” said Rolando Campos, motor drive and motion control research analyst for IHS. “As demand for commodities from China moderates and mining projects are delayed, drive sales will grow by about 7 percent annually through 2017. The path to higher growth rates, however, will not be a straight line and growth rates will vary widely by country.”
Because of lower commodity prices, many material extraction projects and expansions have been delayed. According to IHS Global Insight, commodity prices for rubber, pulp, chemicals, oil, non-ferrous metals declined by 15 to 40 percent from March 2011 to March 2013. Precious metal prices, particularly gold, also have fallen.
Environmental concerns have also led to delays in mining projects.
The Minas Conga mining project in Peru has been delayed because local communities feared their water source could be affected by mining operations. Even so, some mining operators are finding ways to work with local communities by addressing their concerns before mining operations begin. Mining operators like Mienra Yanacocha, for instance, are guaranteeing water supplies before commencing mining operations.
In southern Chile, the HidroAysen hydroelectric project raised fears that coasts could be destroyed, that the environment could be adversely affected by flooding, and that transmission lines through a national park would cause issues. But with governments, companies, and communities looking to find a middle ground, many delayed projects represent possible sources of demand for drives from 2014 to 2017.
This means that as commodity prices stabilize and environmental concerns are addressed, Latin American low-voltage motor drive sales may accelerate from 2014 to 2017, as presented in the attached figure.
Growth in drive sales is predicted to vary by country, with sales of drives in Argentina, Ecuador, and Venezuela forecast to remain at a less than 6 percent CAGR from 2012 to 2017. In comparison, sales in Peru, Chile and Brazil are forecast to grow from 7 percent to 13 percent CAGR, with demand coming from water and wastewater, oil and gas, food and beverage, and mining toward the end of the forecast.