March 2018 - McIlvaine Insights 54

WELCOME

Weekly selected highlights in flow control, treatment and combustion from the many McIlvaine publications.

Briefs
$1 Trillion Combust, Flow and Treat Market in 2018
Advanced Forecasting of the $12 billion On/Off Ball Valve Market and the $ 1 Trillion Combust, Flow and Treat Market

Briefs

Our Municipal Wastewater webinar is slated for March 28. You can register at:

The IIoT and Remote O&M report was just updated with tens of thousands of forecasts for Guide, Control and Measure for each industry in each country. The Guide market which includes process management, data analytics and subject matter expertise will grow from $48 billion in 2018 to just under $64 billion in 2022.

Guide Forecast $ millions World-wide


Industry	2018	2022
Chemical	6003.39	8323.47
Electronics	232.03	305.2
Food	2033.96	2787.18
Iron and Steel	2069.46	2499.65
Metals	495.5	672.99
Mining	816.84	1159.18
Oil and Gas	10926.13	14437.21
Other Electronics	278.36	387.26
Other Industries	5078.25	6836.78
Pharmaceutical	1405.05	1842.25
Power	4423.91	5731.69
Pulp and Paper	2376.01	2903.27
Refinery	6566.51	8758.39
Wastewater	2325.99	2966.24
Water	3013.67	4293.17
Total	48045.06	63903.93

For more information on IIoT and Remote O&M click on N031 Industrial IoT and Remote O&M

$1 Trillion Combust, Flow and Treat Market in 2018

Power, water and industrial plants will spend $1 trillion in 2018 for equipment and services for the combustion, treatment and measurement of gases, liquids and free flowing solids. This expenditure will equal 1% of World GDP and has been a major part of human progress ever since primitive man started utilizing fire. McIlvaine Company multi-client reports cover nearly half the market while private consulting addresses the balance. The reports cover hardware such as air and water treatment equipment but also consumables such as treatment chemicals, cartridges and membranes.

The multi-client reports contain millions of forecasts. They include forecasts for each product in each industry through 2022 in 80 separate countries and sub regions. The multi-client valve report provides separate forecasts for each type of control and on off valve resulting in more than 50,000 forecasts. These forecasts are continually updated. This is necessary because regulations can cause sudden major changes in the forecast.

The IIoT market is the largest and fastest growing. This includes controls and automation including a "Guide" category with process management and data analytics software along with third party advice from subject matter experts. The consumables markets such as cartridges and treatment chemicals are less volatile than the equipment markets. The most volatile markets are FGD and DeNOx for the power industry. Each of these markets has fluctuated from $2 billion to $15 billion depending on the regulatory impact. However, most countries of the world now have retrofitted this technology. So when India and Asean nations complete their programs the market will become mostly one of repair and replace.

2018 Flow and Treat Market - $ Billions
Group	Individual Products within the Group
IIIoT	Control	Guide	Measure Liquids	Measure Air/Gases	Measure Powders
Valves	Ball	Butterfly	Gate	Globe	Three Others
Pumps	Centrifugal	Diaphragm	Reciprocating	Rotary
Cross Flow Membranes	RO Equipment	Micro Equipment	UF Equipment	Membranes (3 segments)
Cartridges	Carbon	Non-woven	Membrane	Metal	String Wound
Sedimentation	Clarifier	Disk	Decanter	DAF	Two Others
Water Chemicals	Corrosion Inhibitors	Flocculants Coagulants	Scale Inhibitors	Oxidizers Biocides	Six Others
Fabric Filters	Systems	Equipment	Bags	Media
Scrubbers	Absorber	Adsorber	Particulate	Dry Scrubber	2 Others
Electrostatic Precipitators	Dry Precipitators	Wet Precipitators	There is also a third party $billion O&M market
FGD	Wet FGD	Dry	$7 billion market for repair and replace
DeNOX	Catalyst	Reagent	Very volatile market. 2018 is a valley
Thermal	Thermal incineration	RTO	Catalytic Oxidizers	Catalyst
Compressors	Centrifugal	Reciprocating	Screw
Fans and Blowers	Centrifugal	Axial	Rotary	Multi Stage	Turbo

Color Code $ billions
>100	> 20	>10	>5	>4	>2	>1	<1

One major process not included in the chart is heat exchange. It is a major investment for the power, chemical, food, refining and a number of other industries. Biological treatment is a substantial market in wastewater and was not included. Reaction processes in the chemical industry were not included in the chart but are part of the $ trillion market.

The rapidly developing Industrial Internet of Things empowered by the Industrial Internet of Wisdom is changing the industry. The connection of knowledge and people and products makes it more important to understand the interaction between blowers and scrubbers, or pumps and filters. Automation and control is expanding faster than the hardware. A number of hardware suppliers are expanding their scope to provide the wisdom about their products with edge computer technology providing a gateway to central systems.

The explosion of knowledge also allows companies to afford advanced forecasting. For example it is now possible to forecast not only ball valve purchases for gas pipelines but to further segment by trunnion vs floating support, top vs side entry, and forecast each of the sizes from 2-36"

More information on the individual market reports is found at http://home.mcilvainecompany.com/index.php/markets

Information on the Advanced Forecasting is described in a 5 step program covered at www.mcilvainecompany.com

For more information contact Bob McIlvaine at rmcilvaine@mcilvainecompany.com 847-784-0012

Advanced Forecasting of the $12 billion On/Off Ball Valve Market and the $ 1 Trillion Combust, Flow and Treat Market

Advanced Forecasting can be defined as

1. Bottoms up forecasting which provides accuracy supported by facts and statistics

2. Detailed segmentation so that the forecasts match the individual sales responsibilities

3. Process for continuing feedback, review and updates

4. Provision for impact of innovative product developments

5. Forecasts of purchasers by each major prospect

Advanced Forecasting can be layered. In the top layer McIlvaine provides forecasts for 80 countries and regions for the next 5 years in more than 20 industries and for hundreds of products. More than 1 million forecasts in the Combust, Flow and Treat industries are continuously updated.

In addition, McIlvaine provides forecasts for generic products for each large purchaser which adds another 20,000 forecasts.

This top layer is adequate for most regional decisions for product combinations. A second layer provides the forecasts for each territory. A third layer segments the markets in each territory for each special product.

The top layer of forecasts is contained in the McIlvaine market reports as shown at http://home.mcilvainecompany.com/index.php/markets

The second and third levels of segmentation are included in specific consulting contracts.

In the top layer the local salesman has a forecast total for all the products for which he is responsible along with forecasts for the large customers with home offices in his territory. Additional layers can segment by specific products. In one case the market for pipeline ball valves was further segmented by trunnion vs floating, side entry vs top entry and by sizes from 2" to 30". The market can also be segmented to include forecasts for purchases by any company purchasing some meaningful amount. If 90% of the dollar volume is by customers with purchases of more than $100,000 per year and the average purchase is $300,000 then purchases for 3.3 million buyers would need to be determined in order to identify the purchasers for 90% of the $ 1 trillion total market.

However, since most companies concentrate on certain products and industries and may not need to identify purchasers of less than $1 million per year, then forecasts for a few thousand companies would be adequate.

Let's take ball valves as an example of Advanced Forecasting. 2018 Valve purchases will be $62 billion. Purchases of ball valves will be $12 billion. This is the largest of 8 categories of valves. The market is further segmented by control vs on/off. Since a small percent of ball valves are used for control, the on-off valve market is over $11 billion. Of this total the power market represents $1 billion. This is further split by type of fuel with 50% coal, 25% oil and gas, 15% nuclear and 10% other.

Valve Market 2018
Segment	Revenue $ billions 2018
Valve Market 2018	62
Ball Valves	12
On/Off Ball Valves	11
Power On/Off Ball Valves	1
Oil and Gas Power On/Off Ball Valves	.25
Nuclear On/Off Ball Valves	.20
Other Power On/Off Ball Valves	.05
Coal On/Off Ball Valves	.50

The nuclear ball valve market is concentrated with just five purchasers accounting for 34% of the market.

Nuclear Power Plant Combust, Flow and Treat Purchases 2018 - $ millions
	World	EDF	Bechtel	KEPCO	Exelon
Percent	100	20	10	5	4
Guide	1400	280	140	70	56
Control	2200	440	220	110	88
Measure	1200	240	120	60	48
Valves	2000	400	200	100	80
Ball valves on/off	200	40	20	10	8
Macrofiltration (Belt Presses, Sand Filters)	200	40	20	10	8
Pumps	1100	220	110	55	44
Treatment Chemicals	1400	280	140	70	56
Sedimentation and Centrifugation	300	60	30	15	12
Variable Speed Drives and Motors	600	120	60	30	24
RO/UF/MF Cross Flow Membrane Systems	200	40	20	10	8
Air Purification and Protection	400	80	40	20	16
Total	11,000	2200	1100	550	440

The coal fired boiler ball valve market is less concentrated than nuclear but still 15 companies make 56% of the purchases.

Coal Fired Power Plant Valve Purchases 2018 $ millions
Company	Country	% Coal Fired Power Plant of On/Off Ball Valve Purchases 2018	Coal Fired Power Plant On/Off Ball Valve Purchases 2018 $ Millions
AEP	U.S.	1.1	5.5
BWE	U.S.	0.6	3
Datang	China	7	35
Duke	U.S.	1	5
Enel	Italy	1	5
Eskom	South Africa	6	30
*Guodian	China	7.5	37.5
Huaneng	China	9	45
Huadian	China	6	30
J-Power	Japan	0.5	2.5
National Thermal Power Corporation (NTPC)	India	7	35
NRG	U.S.	1	5
*Shenhua	China	4.5	22.5
Southern	U.S.	1	5
Uniper	Germany	0.6	3
Vietnam Power (EVN)	Vietnam	2	10
Sub Total		55.8	279
Other		44.2	221
TOTAL		100	500

* These two companies are now combined creating a company with 12% of the purchases

Many of the valve decisions are increasingly being made by OEMS, and EPCs. For new systems the end user will not often directly purchase these components. Large power plant system suppliers will typically purchase or specify the specific brand and product.

As a result, a few thousand people in 31 corporations will make more than 70 percent of the purchase decisions for valves.

Decision Makers for Coal Fired Power Plant Valves	Percent
Top 16 operators - Direct	40
Top 16 EPCs and OEMs for the top 16 operators	12
Smaller EPCS for top 16 operators	3.8
Top 16 operators sub total	55.8
Top 16 EPC's for smaller operators	15
Top 31 sub total	70.8
Purchases by smaller EPCs for smaller operators	9
Smaller operators - Direct	20.2
Total	100

Municipal wastewater treatment plant operators world-wide are anticipated to spend $64 billion for selected flow and treat products and services this year. The majority of these purchases will be made by just 200 operators and 30 engineering/consulting firms.

Suez is supplying more than 30 million people with water and wastewater services. They are also designing plants and purchasing flow and treat products for new as well as existing plants. Beijing Enterprises Water Group (BEWG) operates more than 400 wastewater plants in China and other countries and is also involved in design build projects where they would specify flow and treat products. Chicago MSD operates seven wastewater reclamation plants. It is also expanding its scope by encouraging nearby food processors to send waste to the plant for conversion to biogas. This will increase its sludge processing, compressor and air pollution control purchases. Los Angeles Sanitation's operations are approximately half the size of those in Chicago.

2018 Municipal Wastewater Purchases ($ millions)
	World	U.S.	Suez	Jacobs CH2M	BEWG	Los Angeles	Chicago MSD
Guide	5280	1100	106	63	33	11	22
Control	8640	1800	173	104	54	18	36
Measure	4320	900	86	52	27	9	18
Valves	4800	1000	96	58	30	10	20
On/Off Ball Valves	600	125	12	7	4	1	2
Macrofiltration (belt presses, sand filters)	2400	500	48	29	15	5	10
Pumps	9600	2000	192	115	60	20	40
Treatment Chemicals	6720	1400	134	81	42	14	28
Sedimentation and Centrifugation	4320	900	86	52	27	9	18
Variable Speed Drives and Motors	4800	1000	96	58	30	10	20
Turbines, Fans, and Compressors	10560	2200	211	127	66	22	44
RO/UF/MF Cross Flow Membrane Systems	1200	250	24	14	7	3	6
Air Pollution Control	960	200	19	12	6	2	4
Total	63,600	13,250	1271	765	397	133	266

The food market is much more fragmented than most of the other markets. Cartridge expenditures this year by the industry will be $591 million. The largest purchasers will each buy 1% or less of the total. The industry will spend $522 million for on off ball valves which is slightly less than for cartridges.

Subject

ADM

Anheuser

Busch

Cargill

Coca Cola

Con Agra

Food On/Off Ball Valves

2.6

3.5

1.8

2.6

0.9