The year 2009 was a difficult one due to the global economic downturn for many control valve suppliers, with some of the key global suppliers suffering double-digit percentage revenue declines. Other suppliers’ shipments, however, were buoyed by the strong backlog they had at the beginning of the year. Overall, shipments for control valves were down nearly 4 percent from 2008. The current year, 2010, looks to be even more grueling for control valve suppliers as they continue to face soft global demand, this time without the support of a healthy backlog. Despite the current pessimism, there remain a number of factors pointing towards long-term control valve growth according to a new ARC Advisory Group study.
Control valves are widely used in manufacturing applications to optimize production and lower cost in a wide range of industries, and are poised for moderate growth in the long term.
“Manufacturers have recognized that automation is key to survival in the global economy and there are crucial factors that will continue to drive the use of automation, fueling control valve market growth. These automation drivers include growing demands for energy savings, higher productivity, increased production accuracy, better product quality, greater manufacturing agility to satisfy changing market demands, additional condition monitoring, better process control, increased safety functionality, greater capability for collaborative processes, and additional assurance regarding regulatory compliances,” according to senior analyst David Clayton, the principal author of ARC’s “Control Valve Worldwide Market Outlook”.
Long-Term Supply and Demand Issue for Oil Is Critical
The price, availability, and demand for oil remain key factors in the overall health of the global control valve market. While ARC has seen a temporary reduction in demand for oil, the long-term trend is clearly one of increasing demand amid shorter supply. In ARC's opinion, this will result in increased oil prices in the long term, increased investment in heavy oil production (such as oil sands), and increased investment in upstream oil & gas development and production in deep-sea fields.
The price, availability, and demand for oil remain key factors in the overall health of the global control valve market. While ARC has seen a temporary reduction in demand for oil, the long-term trend is clearly one of increasing demand amid shorter supply. In ARC's opinion, this will result in increased oil prices in the long term, increased investment in heavy oil production (such as oil sands), and increased investment in upstream oil & gas development and production in deep-sea fields.
Demand for Additional Electric Power Generation in Emerging Countries is also Key
Capital spending for power generation has grown substantially in developing countries in recent years, especially in China, with high growth in India expected in the near future. The rapid expansion of the Chinese economy, especially in manufacturing, is in some cases limited by the availability of power, so pressure to develop more generation capacity is intense. This problem is magnified in India, where unreliable power infrastructure often affects manufacturing and has caused many companies to build their own power generation facilities, creating substantial demand from both public and private sources. Similar, but less intense, pressures are being felt in other emerging economies.
Capital spending for power generation has grown substantially in developing countries in recent years, especially in China, with high growth in India expected in the near future. The rapid expansion of the Chinese economy, especially in manufacturing, is in some cases limited by the availability of power, so pressure to develop more generation capacity is intense. This problem is magnified in India, where unreliable power infrastructure often affects manufacturing and has caused many companies to build their own power generation facilities, creating substantial demand from both public and private sources. Similar, but less intense, pressures are being felt in other emerging economies.
Developing Economies Remain the Engine for Growth
Developing economies, such as China, India, and Brazil also feel the effects of the global economic crisis, shedding many growth points compared to the extremely high growth levels experienced through 2008. The developing economies, however, remain the primary growth engine for the global control valve marketplace. Emerging economies, such as those in the BRIC (Brazil, Russia, India and China) countries, and the Middle East will continue to prop up the global control valve market with increasing consumer demand from the growing global middle class, a healthy lending environment for capital investments that project solid returns, and the need for producing and saving energy to cope with rapidly rising energy demands and costs across the globe.
For more information on this study, visit ARC's Market Research section.
