Written by Sandeep K Mukunda and Sakthi Pandian, Frost and Sullivan
The outlook of the global chemical market, for the year 2015 depicts a strong market condition with growth in many of the major chemical manufacturing regions of the world.
The expansion of shale extraction in North America has led to accelerated growth in petrochemical production, enabling the U.S. chemical industry to increase their production levels for exports. The shale gas production has led to numerous U.S. based chemical manufacturers, earlier operating offshore, to move facilities back to the US due to availability of cheap energy. The extracts, from the shale, acts as a low cost feedstock for petrochemical manufacturing resulting in cost-effective production of ethylene, propylene and butadiene. The annual spending on US petrochemical projects is forecasted to grow by 8.3 percent to $6.5 billion for the year 2015.
Other countries reflecting stable growth in chemical sectors include China and India. The chemical exports from China are anticipated to increase moderately due to the mature phase of the China’s chemical market. Also, certain specialty chemicals and fine chemical production are expected to exhibit good growth potential over the year. Over the next three years, China’s ethylene production capacity is forecasted to increase by 36 percent resulting in 45 to 51 percent of Asia’s overall ethylene production. Growth of China’s automotive and agro industries portend a stable demand for chemicals specific to lubricants and fertilizer manufacturing. However, overcapacity is expected to dampen the margins for the industry in 2015. On the bright side, the chemical industry in India is expected to show promising growth in specialty and construction industry chemicals. Other countries in South East Asia show a relatively stable growth as demand for chemical products continue to persist.
The Middle East has also been one of the most important contributors to the global chemical market. The ability to offer favorably priced chemical products due to the surplus availability of low cost feedstock has been a major driver of the Middle East chemical industry. However, recent feedstock shortages encountered have led to numerous strategies promoting more subsidiaries and alliances between the chemical manufacturers of the region to sustain and maintain the production level. Also, the region has lost its cost advantage with the advent of the US shale boosting its petrochemical industry. To diversify their presence, a number of companies in the region have expanded to using naphtha as a feedstock. This may decrease the cost advantage, but about 65 new products are expected to be added into the existing portfolio by the end of 2020. About $60 billion worth of petrochemical projects are under construction in Saudi Arabia with close to 33 percent of these facilities to be operational by the end of 2015.
These trends are expected to positively impact demand for industrial valves in the global chemical industry. The petrochemical sector has suffered a drastic change as a result of shale dynamics which has increased import threats from US.
Industrial valves market in global chemical industry:
The chemical industry is mostly associated with hazardous conditions due to the flammable nature of the medium (petrochemical), extreme temperature /pressure variation and harsh operating environment. This mandates some of the required characteristics of process equipment including seamless geometry, hermetic sealing ability, and high endurance against corrosion and explosion.
Due to current developments observed in the chemical industry of North America and APAC, demand in the industrial valves and actuators market for chemical application is projected at a CAGR of 5.5 percent from 2014 to 2018. The chemical industry applications for the valve and actuator market account for about 20 percent of the total valve and actuator market across all industries. The chart provides a forecast of the market across regions from 2010 to 2018 and shows a growing market after the slump in 2010 to 2011.
Quarter turn valves, especially ball valves and butterfly valves, are extensively used in the chemical, industry in comparison to other industries. It is expected that these valves are replacing some of the market share of multi-turn valves due to advantages in size, cost and durability. Some of the specific uses for ball valves include applications in bio-ethanol, edible oils and ethylene oxide plants. Among the various categories of control valves, rotating valve control valves are seen to be predominantly used in chemical applications. Growth of the chemical industry is also expected to accentuate the demand for pneumatic actuators based on benefits of cost and reliability.
With respect to valve construction, stainless steel bodied industrial valves and lined valves are the most sought after valve type in chemical industries. Despite the high cost of stainless steel bodied valves, they are preferred due to high corrosive endurance and sanitary applications. However, for low cost lined valves (PTFE, Teflon) the lining can be replaced periodically based on working requirements.
The reduction of atmospheric emissions from valves has been a key factor determining the sales of valves. Valves with hermetic sealing ability such as diaphragm valves are witnessing a high demand due to enhanced operational functionalities.
Besides off-the-shelf product ranges available from the valve manufacturers, there is a significant demand for custom built specialty valves for certain critical application. Successful valve manufacturers continue to enhance their technology to serve better to the chemical industry and stay ahead of regulatory and energy efficiency requirements.
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