Valve Forecast Changes Webinar - September 11, 2015
This 40 minute webinar will review changes to the forecasts in Industrial
Valves: World Market. Explanations will be given for key factor selections
such as oil prices and Chinese economic growth. Examples of the type of
information to be presented are shown below.
The market for industrial valves is impacted by many different factors. Some of
these factors are constantly changing. Two of the biggest changes in the
last month have been the economic slowdown in China and the lower prices for oil
and gas.
Valve sales in 2015 will be $57 billion of which China will account for 17
percent. If Chinese economic growth continues at 7 percent over the next
four years, there will be an expansion of the valve market by $12 billion.
Under a zero annual economic growth in China the world valve market would only
grow $5 billion/yr. by 2019. This takes into account not only the
lower purchases in China but reduced purchases by suppliers to China.
It now looks as if the economic growth for China in 2016 will be less than the
anticipated 7 percent. Predictions range to as low as 2 percent. This could be
followed by a return to 7 percent growth in succeeding years including 2019.
However, the political and financial management of the economy is facing a
confidence crisis which it must weather if it is to resume its previous growth
levels. There are also questions about the reliability of some of the
government statistics which are used to assess growth. It is, therefore,
necessary to look beyond the easily available statistics and to continue to
analyze the fundamentals. Even though the stock market has dropped
dramatically in the third quarter of 2015, it still remains at high levels
compared to previous years. Consumer demand is high and with reductions in
interest rates industrial expansion will be encouraged.
The drop in oil prices to under $40 /barrel late in the third quarter 2015 has
immediate impacts on the valve market. Drilling activity has been
reduced. A number of large projects have been delayed or canceled.
However, the overall impact on the valve market is softened by the fact that the
majority of valve are sold for applications unaffected by oil prices.
The market for industrial valves will grow by 16 percent from 2015 to 2019 at
oil prices of $80/barrel during the period. At $40/barrel, the growth will
only be 9 percent.
The industrial valve market is led by oil and gas which represents 15 percent of
the present market. However water and wastewater, power, refining,
petrochemical and other industries account for 85 percent of the market.
The impact of future oil prices on the market can be best predicted by
estimating the impact on the individual segments.
Oil and gas can be divided into two segments. The aftermarket and routine
purchases for small projects represent two-thirds of the total or 10 percent of
the present total pump market. The longer term large project revenues
represent only 5 percent of the current market. If the price of oil were
to continue to remain at $40/bbl through 2019, revenues in this segment would
shrink over the period.
The chart shows percentages of the present 2015 market for the year 2019.
At $40/barrel oil the long range valve product revenue from the oil and gas
large project segment would shrink by 60 percent from 5 percent of the current
market in 2015 to an amount in 2019 which is equivalent to 2 percent of the 2015
market. On the other hand, the oil and gas aftermarket and market for
small projects would grow slightly during the four year period. In fact,
the market for pipeline valves will be positively impacted as low cost oil and
gas needs to be moved to more places.
The petrochemical market will grow faster at $40 oil. Municipal water and
wastewater will be unaffected by the fluctuation in oil prices. Lower
prices will result in more gasoline being consumed and more oil being refined.
The power market will be impacted by greater use of gas turbine combined cycle
power plants but total revenues for valves in the power industry will not be
impacted greatly by fluctuating oil prices.
McIlvaine will continue to assess the likely changes in oil prices based on the
following factors:
·
The breakeven cost for a new well
o
Hydraulic fracturing breakeven point is $30 to $50/barrel equivalent based on
improved management practices and the extraction of more products from existing
wells.
o
Oil and tar sands projects break even at $65/barrel.
o
Subsea is more expensive.
·
New technology developments
o
Bechtel experience with coal seam gas to LNG in Australia indicates lower break
even costs than subsea extraction.
o
China coal to syngas and chemicals could be an alternative which is more than
competitive at $40 oil. McIlvaine has recommended marrying the two stage (HCl/SO2)
scrubbing along with conventional hydrochloric acid leaching to extract rare
earths and generate by product revenue.
·
Demand
o
The slowdown in China could impact demand as could economic problems in Greece
and other countries.
o
Demand is a function of industrial activity. There is little equipment
needed to extract Saudi oil. On the other hand, over 2,000 companies rely on the
Alberta oil sands market for their revenues. The greater the industrial activity
the greater the oil demand.
·
Supply
o
Saudi Arabia could choose to restrict production. In many ways the
situation is analogous to the gold in Ft. Knox. You could sell it at any
price and generate positive cash flow. However, it is a precious and finite
resource which is important to future generations.
o
Market driven companies will typically be reactive rather than proactive and
will only increase drilling after oil prices rise to a level to make drilling
profitable.
·
Political developments
o
Lifting the Iran embargo on oil exports.
o
Russian activities in the Ukraine and elsewhere.
o
Chinese efforts to manage the economy.
o
Uncertainties in North Korea, Greece and Venezuela.
·
Regulatory initiatives
o
Export restrictions.
o
Climate change regulations.
o
Pollution control requirements for hydraulic fracturing.
·
Traumatic events
o
Major oil spills.
o
Large meteorite impact, earthquake or major volcano eruption
Some of these developments are more predictable than others. The low oil
prices lead to lower extraction activity which eventually leads to shortages and
higher prices. On the other hand, wars, oil spills and earthquakes cannot
be easily predicted. As a result, there will be the need for continuous
changes in the forecasts to take into account the surprises.
Record Your Power Point Presentations and Reach the Prospects
The presentations which will convince a prospect to consider a specific product
or service are too often only shown to a few customers. We can record these
presentations for less than $1000 each and post them to YouTube. With
coverage directly on YouTube plus links from the McIlvaine website and your
website, you can gain as many as 1000 viewers. What other medium can give you
the attention of an interested prospect for $1. In addition to English,
your salesmen in China or other countries can provide a duplicate presentation
in the local language. For more information on this program contact
Bob McIlvaine at:
rmcilvaine@mcilvainecompany.com
847-784-0012 ext. 112.
World Market for Air and Water Monitoring to Rise to be $31 - $33 Billion in
2019 Depending on the Chinese Growth Rate
China will spend more than $1.7 billion for power plant air and water
monitoring in 2015. This represents 40 percent of the world’s power plant
air and water monitoring purchases. The total monitoring market for all
industries will be $29 billion of which China represents 17 percent. China will
be the leading continuous emissions monitoring purchaser in 2015 with forecasted
purchases of $750 million. Residential/commercial HVAC air monitoring purchases
in China will be $1.9 billion in 2015.
The uncertainty relative to future growth in the Chinese economy makes the
prediction of the 2019 world market more difficult. At an economic growth
rate of 7 percent in China, the world market in 2019 will be $33 billion.
At 7 percent annual economic growth through 2019 continuous emission monitoring
and residential HVAC expenditures will be at about the same level as in 2015.
The reason is that 2015 revenues are at a high point and cannot be expected to
keep increasing. At a 2 percent economic growth rate in China, there would
be a substantial reduction in air and water monitoring purchases in that
country. The result would be a world market in 2019 of only $31 billion.
McIlvaine is revising air and water monitoring forecasts quarterly in N031
Air and Water Monitoring: World Market.
This example focused just on the Chinese economy could be misleading due to the
fact that many variables have to be taken into account in each quarterly change.
China is a leading purchaser but other trends could be more significant.
One of the significant variables is the price of oil. The oil and gas industry
is a mid-range purchaser of air and water monitoring. These prices also
indirectly impact other market segments. The political situation in
Southern Europe, Russia and other countries is important and constantly
changing.
For more information on
N031 Air and Water Monitoring: World Market,
click on:
http://home.mcilvainecompany.com/index.php/markets/2-uncategorised/106-n031.
Chinese Air Pollution Tsunami Will Hit U.S. Shores in a Few Years
A huge but declining air pollution control (APC) market in China will create a
tsunami which will exceed the Japanese and European APC tsunamis of previous
decades. This is the prediction of McIlvaine Company in Air Pollution
Management. (www.mcilvainecompany.com)
What is an APC tsunami and what is its cause? The tsunami is the sudden
appearance of many new foreign players in a domestic market. The cause is that
national regulations create temporary large markets. When these markets slow,
the suppliers look elsewhere to sell their products.
The U.S. has experienced two such events. Flue gas desulfurization (FGD)
was developed in the U.S. and applied to 10 percent of the 300,000 MW coal-fired
base in the 1975 timeframe. Japan then decided to install FGD immediately
on all its 30,000 MW of coal-fired capacity. So it was the world’s largest
market for several years. Mitsubishi, Chiyoda and Hitachi all entered the
market. When the Japanese market subsided, they started pursuing the U.S. market
and over the years became major suppliers.
The world precipitator market was dominated by two U.S. companies:
Research Cottrell (RC) and Western Precipitation (WP). As a result of
European tsunami, they disappeared under the waves. Their demise was more
than just the aggressive activity of European suppliers. Europe mandated
continuous compliance for particulate control. No such requirements
existed in the U.S. Flimsy wire rappers supplied by RC and WP would break
and were no match for the rigid frame European design. Flӓkt (Sweden) very
quickly became the top U.S. precipitator supplier.
The Japanese market for coal-fired boiler air pollution control is one tenth the
size of the U.S. market. The European market is equal to the U.S.
The Chinese market is four times the U.S. in the long term and twenty times the
U.S. in the short term. So the Chinese tsunami potential is huge. The top
ten air pollution control companies in China are all in the top twenty worldwide
even though all their business is in China. The huge retrofit program has
created an unsustainable bulge in the market. The economy is also slowing
and there will be no more years with 100,000 MW of new coal-fired power plants.
Much of the Chinese technology was originally under license, but improvements to
the technology have been made. One major supplier requires its engineering
staff to spend 30 percent of its time on development of improved products.
One example of an improved product is a hybrid precipitator-fabric filter
licensed from U.S. DOE. The Chinese supplier has commercialized this with
many successful installations. The U.S. Dry Fork power plant dry scrubbing
system duplicates an installation in China.
The magnitude of the tsunami can be measured in SCR catalyst capacity.
World demand in 2010 was 130,000 m3. Chinese SCR catalyst
production was zero. Due to retrofits there was a Chinese need for as much
as 200,000 m3 in just one year. China now is the world
production leader. However, catalyst only needs to be replaced every six
years, so China already has excess capacity. The situation relative to
systems and components is even more calamitous. Systems last 25 years.
Coal-fired boilers are the largest application for air pollution control. Future
new equipment markets are spread throughout the developing countries.
However, there is a very large upgrade and maintenance market in the U.S. and
Europe. The Chinese tsunami will necessarily be focused on the existing
U.S. plants.
The worldwide APC new system capability already exceeds the needs over the next
decade. On the other hand, the upgrade and maintenance demand is going to
exceed supplier capability. Plant owners want to focus on their core business
and would like to outsource as much of the air pollution control activities as
possible. The result will be a Chinese Total Solutions tsunami which provides
all upgrading, operations and maintenance needs.
For more information, click on:
N031 Air
and Water Monitoring: World Market
N027 FGD
Market and Strategies
N018
Electrostatic Precipitator World Market
N021
World Fabric Filter and Element Market
Headlines for Utility E-Alert – August 28, 2015
UTILITY E-ALERT
#1238– August 28, 2015
Table of Contents
COAL – US
GAS/OIL – US
GAS/OIL – WORLD
GASIFICATION
NUCLEAR
BUSINESS
HOT TOPIC HOUR
For more information on the Utility Tracking System, click on:
http://home.mcilvainecompany.com/index.php/databases/2-uncategorised/89-42ei
”Power Plant Pumps” is the Hot Topic Hour on September 10, 2015 at 10:00 a.m.
CST
A webinar on September 10 at 10:00 a.m. central time will cover the options and
issues regarding selection of fossil-fired power plant pumps. There is a
very ambitious goal to provide a website with the most comprehensive information
on power plant pumps. This is part of a whole knowledge system to provide
Alerts, Answers, Analysis and Advancement in every aspect of power. Owners
and operators around the world have free access to
44I Power
Plant Air Quality Decisions (Power
Plant Decisions Orchard) and
59D Gas
Turbine and Combined Cycle Decisions.
The Power Plant Pumps Decision Guide is one of the subsidiary websites in both
these knowledge systems.
This webinar will be focused on creating a Power Plant Pump Route Map and
Summary which will help decision makers navigate the website. The first inputs
to this Route map are displayed at Power
Plant Pumps Route Map.
The following presenters will be helping to lead the discussions:
Jose Gutierrez,
Director/Business Development, ITT Corporation & Xylem/ Goulds Vertical Products
Kei Koeda,
Manager, International Sales & Marketing, Hydraulic & Energy Business Group,
Business Division, Energy & Environment, Mitsubishi Heavy Industries, Ltd.
Jason M. Hoover,
Leader – Medium Voltage Drives, USA, Siemens Large Drives
Allen Daniszewski,
National Sales Manager – Industrial Products, SPX Process Equipment –Delavan
Operations
The website already exists but there is conflicting information. For
example, the introduction of ceramic impellers for FGD slurries needs to be more
closely examined. These more detailed subjects will be pursued with continuing
correspondence and future webinars.
If you want to participate in the discussion and are an owner/operator or
subscriber to
44I Power
Plant Air Quality Decisions,
59D Gas
Turbine and Combined Cycle Decisions,
or
N019 Pumps
World Market there
is no cost for participating in the actual discussion. Otherwise there is
a $300 participation fee. For more information on supplying data or
participating contact Bob McIlvaine at
rmcilvaine@mcilvainecompany.com
McIlvaine Hot Topic Hours and Recordings
McIlvaine webinars offer the opportunity to view the latest presentations and
join discussions while sitting at your desk. Hot Topic Hours cater to the end
users as well as suppliers while the Market Updates cater to the suppliers and
investors. Since McIlvaine records and provides streaming media access to
these webinars there is a treasure trove of value only a click away. McIlvaine
webinars are free to certain McIlvaine service subscribers. There is a charge
for others. Hot Topic Hours are free to owner/operators. Sponsored
webinars provide insights to particular products and services. They are
free. Recordings can be immediately viewed from the list provided below.
DATE |
UPCOMING HOT TOPIC HOUR |
UPCOMING MARKET UPDATES |
September 10, 2015 |
Power Plant Pumps |
|
September 11, 2015 |
Valve Market Forecast Changes |
|
September 24, 2015 |
Power Plant Water Monitoring |
|
September 25, 2015 |
Pump Market Forecast Changes |
|
October 1, 2015 |
Power Plant Water Treatment
Chemicals |
|
October 2, 2015 |
Fabric Filter Market Forecast
Changes |
|
October 22, 2015 |
Precipitator Improvements |
|
November 12, 2015 |
Dry Scrubbing |
|
December 3, 2015 |
NOx Reduction |
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You can register for our free McIlvaine Newsletters at:
http://home.mcilvainecompany.com/index.php?option=com_rsform&formId=5
Bob McIlvaine
President
847-784-0012 ext 112
rmcilvaine@mcilvainecompany.com
www.mcilvainecompany.com