NEWS RELEASE                                   FEBRUARY 2010

Energy Needs Will Drive the Industrial Valve Market Over $100 Billion in Revenues by 2030

The demand for industrial valves will expand from its present level of just under $50 billion/yr to over $100 billion/yr by 2030.  The main driver will be the energy needs of the developing countries.  Energy already accounts for over 40 percent of valve demand.  Power, refining, and oil and gas are all going to expand at a rate faster than average GDP during the next two decades.  These are the latest forecasts in Industrial Valves: World Markets, a continually updated online report of more than 4000 pages published by the McIlvaine Company.

                                                                Valves Sales 2010     

                                                            Industry              $ Billions

Chemical                     5.9

Electronics                    .5

Food                           1.2

Iron & Steel                2.0

Metals                           .8

Mining                           .9

Oil & Gas                    7.8

Other Electronics          .3

Other Industries           5.6

Pharmaceutical            1.5

Power                          6.5

Pulp & Paper               2.9

Refining                        6.4

Wastewater                  4.0

Water                           2.9

Total                           49.2

Some of the expanding sectors will require disproportionately large expenditures for valves.  In nuclear power the valves are among the most critical and expensive components in the plant. Protection against meltdown and explosions is based on quick and reliable functioning of the valve systems.

World nuclear capacity is projected to grow by over 130,000 MW in the next 20 years.  This expansion will require 390,000 nuclear grade valves plus additional valves for the steam and cooling cycle which bring the total to over 1.2 million.  Life extension and replacement will require another 3.6 million valves bringing the total to over 4.8 million valves in 20 years or 240,000 valves per year.

Prices of valves utilized in the critical areas range from $20,000 for a small globe valve to over $1 million for a 38 inch main steam isolation valve.  The forecasted revenues for valves for this industry are $1.3 billion/yr.

Coal-fired power is projected by McIlvaine to increase from 1.8 million MW to 2.4 million MW by 2020 and then to slow down with 400,000 MW addition in the 2020-30 period.  This will result in a total installed coal base of 2.8 million MW in 2030.  The valve demand will be substantially increased because of the life extension efforts of coal–fired plants in the U.S.  It will be further increased by the requirements to install pollution control equipment and even CO₂ capture systems.

The market for combined cycle gas turbines will grow at a rate faster than coal but represents a smaller market for valves.  Valve expenditures for oil and gas production will increase as subsea and other challenging environments are increasing the locations for new extraction.  Refining represents the third largest single market.  The trend toward utilization of less desirable fuel stock will result in continuing upgrading and increased valve requirement in this sector.

Climate change regulations are likely to affect the long-term market but will not have much impact prior to 2030.   One reason is that renewable technologies will not capture a significant market share before 2030.  A second reason is that hydropower, biomass, and geothermal require substantial valve investment.  In the solar segment the large solar–steam power plants use more valves than a combined cycle gas-fired plant.  A third reason is that it takes more renewable capacity to generate equivalent electricity due to the intermittent operation. A fourth reason is that the switch to cellulosic ethanol will require very substantial valve investments.  A fifth reason is the use of valves in carbon capture and sequestration projects.

There will be steady growth in the sanitary valve segment.  The pharmaceutical and biotechnology sectors will grow faster than GDP.  Steady growth in food processing will also contribute to the valve market expansion.  The fine and basic chemical sectors are also slated for steady growth.

The electronics sector will remain volatile but with average growth rates in excess of GDP.  Semiconductor plants require large numbers of critical valves for etching chemicals, chip washing, ultrapure water systems and other applications.

China will be the largest purchasing country of valves for new plants (not replacement) during the period.  Much of the supply will be available from domestic sources.  Neway, the largest Chinese supplier, has nuclear stamps and can deliver high performance valves.  A number of international companies are continuing to build their Chinese presence for two basic reasons.  One is to gain market share in China and the other is to provide a base to export to the rest of Asia and other regions of the world.

In general the valve industry will become more international and consolidated in the next two decades.  Presently there are only three companies with over $1 billion in valve sales.  They presently capture 10 percent of the market.  More than 40,000 companies participate in the valve market around the world.  Over the next two decades this number will shrink as global players expand their role.