Mcilvaine Insights

 

No. 23   July 18, 2017


WELCOME

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

 

       Bi-weekly Webinars Continue with Semiconductor IIot Tomorrow

       Identifying the Top Purchasers

 

 

 

Bi-weekly Webinars Continue with Semiconductor IIot Tomorrow

 

There is still time to register for our webinar tomorrow, July 19, 2017 at Weekly IIoT Webinars.

 

Recorded webinars covering individual industries are part of a program to forecast the market for IIoT and Remote O&M, but also to initiate a program to pursue the 550 companies who buy the majority of the IIoT, combust, flow and treat equipment and services. The webinar tomorrow will briefly cover the broader IIoT initiative to monitor and control all the semiconductor equipment. The majority of the time will be spent on the cleanrooms, HVAC, ultrapure water, wastewater, and air pollution control operations. There will be special focus on the pumps, valves, filters, scrubbers, treatment chemicals and sensors.

 

IIoT will be the catalyst of change in the route to market for component suppliers. When every filter and valve is continuously monitored and its performance compared to competitive components in operation in the system, a new basis for purchasing decisions is created.

 

Most suppliers already have separate sales efforts for the large potential purchasers. Since 60 percent of the products will be purchased by just 555 companies, suppliers can justify the prioritization of sales to this group. McIlvaine has a program to identify the companies, projects, people, and the ways not only to reach them, but to convince them.

 

N064 Air/Gas/Water/Fluid Treatment and Control: World Market analyses the market for flow control and treatment at a high level. Since this market is now being transformed by IIoT, this service is now available as part of N031 Industrial IOT and Remote O&M.

 

Specific forecasts for purchases by the 555 companies of each product or service are now included in the McIlvaine market report Markets.

 

The plants and projects for the 555 companies are reported in Databases

 

Contacts at those 550 plants are included in several ways including several databases People

 

The systems to expand IIoW are shown in Decisions

 

A customized program can be provided which not only provides interconnection between supplier and purchaser, but interconnection to other influencers and interconnection among company employees.

 

View the recorded Webinars

 

The impact of IIoT and Remote O&M on each industry and each type of combust, flow, and treat products is addressed in previous webinars which are posted on youtube. Here are the links:

 

Gas Turbine, Reciprocating Engine IIoT and Remote O&M - https://youtu.be/1H_6Ak66rh0

 

Coal Fired Power IIoT and Remote O&M - https://youtu.be/9teajcQXsi4

 

Pump IIoT and Remote O&M - https://youtu.be/PVmyVBBLNOg

 

Industrial Valve IIoT & Remote O&M - https://youtu.be/Mi6-p88x9hc

 

Oil and Gas and Remote O&M - https://youtu.be/o7kJSXixFHs

 

Filtration and Separation IIoT and Remote O&M - https://youtu.be/-XqSwyQctos

 

Water & Wastewater IIoT and Remote O&M - https://youtu.be/AWB-vZIj5gk

 

Air Pollution Control - https://youtu.be/yTSatiu5oyY

 

Cleanroom - https://youtu.be/Xe_NYnLmmAA

 

Ultrapure Water - https://youtu.be/gRucY_BN47E

 

Treatment Chemicals - https://youtu.be/gRucY_BN47E

 

Mining - https://youtu.be/gRucY_BN47E

 

Chemical Manufacturing - https://youtu.be/gRucY_BN47E

 

Pharmaceutical Manufacturing - https://youtu.be/gRucY_BN47E

 

Identifying the Top Purchasers

 

Five hundred and fifty-five companies in 13 different industries will spend $240 billion or 60 percent of the total amount that will be spent in 2018 for flow and treat products and services.

 

Industry

 

No. Included

Total

 

555

Chemical

 

40

Electronics

 

15

Food

 

40

Metals

 

30

Mining

 

20

Oil and Gas

 

50

Pharmaceutical

 

30

Power

 

70

Pulp & Paper

 

50

Refinery

 

60

Stone

 

50

Wastewater

 

50

Water

 

50

 

 

Coal fired Power Plants - Pumps:  Coal-fired plant operators will spend $1.5 billion for pumps each year for the next five years. The top five operators will purchase over 36 percent of the total. The top 15 companies will spend $825 million/yr. This is the latest analysis from the McIlvaine Company in Pumps World Market. The No. 4 purchaser, NTPC, and the No. 8 purchaser, Vietnam Power, will be purchasing mostly for new facilities. Those utilities in China and Africa will have a mix of purchases for new and existing facilities whereas the operators in the U.S. and Europe will be spending mostly on repairs and upgrades.

 

Company

Country

Rank

Average Annual % of Total Coal-fired Pump Purchases  Next 5 Years

Average Annual Pump Purchases Next 5 Years
($ millions)

AEP

U.S.

9

1.1

16.5

BWE

U.S.

14

0.6

9

Datang

China

3

7

105

Duke

U.S.

10

1

15

Enel

Italy

13

1

15

Eskom

South Africa

5

6

90

Guodian

China

2

7.5

112.5

Huaneng

China

1

9

135

Huadian

China

6

6

90

J-Power

Japan

16

0.5

7.5

National Thermal Power Corporation (NTPC)

 

India

4

7

105

NRG

U.S.

11

1

15

Shenhua

China

7

4.5

67.5

Southern

U.S.

12

1

15

Uniper

Germany

15

0.6

9

Vietnam Power (EVN)

Vietnam

8

2

30

Sub Total

 

 

55.8

837

Other

 

 

44.2

663

TOTAL

 

 

 

1500

 

 

The biggest expenditures will be made for boiler feedwater, cooling, FGD, and wastewater. Chinese operators are investing in zero liquid discharge. This process requires pumps in the stages preliminary to evaporation. Due to the lack of water in arid Chinese areas, the plants are selecting dry cooling which does not require pumps. Most new plants use ultra-supercritical technology. This requires more expensive pumps to develop the high pressures.

 

Power plants are accelerating the IIoT transformation. Remote monitoring and control will be common. Some pump companies are packaging pumps with software to optimize operation. This promises to substantially increase the revenue opportunity.

 

For more information on Pumps click on:  N019 Pumps World Market

 

The sales of valves to the chemical industry in 2016 totaled $7 billion. The top four chemical companies valve purchases totaled $386 million.

 

Number 1, BASF is the largest chemical producing company in the world with 2016 valve purchases of $126 million. The German company, headquartered in Ludwigshafen, Germany is focused on industry grade chemicals used in the automotive, construction, and pharmaceutical industries. The company is investing heavily in Industry 4.0. As a result, it will be able to monitor the valve performance at all its plants around the world. This will facilitate determination of the valves and systems which provide the lowest total cost of ownership. It has a system for vendor interaction and strategic procurement powered by SAP Ariba. It is creating a center for expertise in Ludwigshafen which guides the component choice at their plants around the world. The magnitude of this effort was chronicled in three articles in Valve World last year.

 

Number 2, Dow - When the merger is final Dow/Dupont will be the largest chemical company in the world with valve purchases of close to $140 million. Dow Chemical and DuPont said their merger's end date was being pushed back but added it was still on track as DuPont moved forward with plans to divest assets, a condition of European Union

approval for the deal.

 

The companies now expect the deal to close in August 2017, after being delayed by intense regulatory scrutiny. When the deal was first announced in December 2015, it was expected to close in the first half of 2016.

 

Number 3, Sinopec has total yearly valve purchases of close to $540 million. However less than $91 million is generated in the chemical industry. The most downstream of China's big three energy companies (alongside CNPC and CNOOC) Sinopec is more a producer of petrochemicals, fuels, and lubricants than an exploration and production company. It is the world's largest purchaser of flow and treat equipment services.

 

In March 2017 Sinopec paid almost $1 billion for a 75 percent stake in Chevron Corp's South African assets and its subsidiary in Botswana to secure its first major refinery in Africa. Sinopec is Asia's largest oil refiner. The new assets include a 100,000 barrel-per-day oil refinery in Cape Town, a lubricants plant in Durban as well as 820 petrol stations and other oil storage facilities.

 

Sinopec Group's key business activities include:  industrial investment and investment management; the exploration, production, storage and transportation (including pipeline transportation), marketing and comprehensive utilization of oil and natural gas; the production, marketing, storage and transportation of coal; oil refining; the storage, transportation, wholesale and retail of oil products; the production, marketing, storage, transportation of petrochemicals, natural gas chemicals, coal chemicals and other chemical products; the exploration, design, consulting, construction and installation of petroleum and petrochemical engineering projects.

 

Number 4, SABIC (also known as the Saudi Arabia Basic Industries Corporation) is a chemical producing company in Saudi Arabia and is the largest company in the Middle East. Valve purchases in 2016 were $70 million.

 

The company is currently the largest producer of polycarbonate and granular urea and is the second largest producer of ethylene glycol in the world.

 

SABIC was founded by the Saudi royal family in 1976 as an oil refinery. The creation of the company spurred the growth of the neighboring area transforming Yanbu from a fishing village to what is now one of the biggest industrial cities in the world.

 

The top 20 valve companies purchased 14.5 percent of the world's chemical valves in 2016.

 

Top Ten Chemical Companies

Rank

Company

Valve Purchases
2016 - $ millions

Percent of
Total
Valve Purchases

 

Cumulative
Total

1

BASF

126.2

1.8

1.8

2

Dow Chemical

98.2

1.4

3.2

3

Sinopec

91.2

1.3

4.5

4

SABIC

70.1

1.0

5.5

5

Formosa Plastics

56.1

0.8

6.3

6

Ineos

56.1

0.8

7.1

7

ExxonMobil

56.1

0.8

7.9

8

LyondellBasell Industries

56.1

0.8

8.7

9

Mitsubishi Chemical

49.1

0.7

9.4

10

DuPont

42.1

0.6

10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Chemical Companies - Ranking 11-20

Rank

Company

Valve Purchases
2016 - $ millions

Percent of
Total
Valve Purchases

 

Cumulative
Total

11

LG Chem

35.1

0.5

0.5

12

Air Liquide

35.1

0.5

1.0

13

Linde

35.1

0.5

1.5

14

AkzoNobel

35.1

0.5

2.0

15

Toray Industries

35.1

0.5

2.5

16

Evonik Industries

28.0

0.4

2.9

17

PPG Industries

28.0

0.4

3.3

18

Braskem

28.0

0.4

3.7

19

Yara

28.0

0.4

4.1

20

Covestro

28.0

0.4

4.5

 

 

 

 

The top 200 companies purchased 39 percent of the world's chemical valves in 2016.

 

 

Rank

Valve Purchases
2015 - $ millions

Percent of
Total
Valve Purchases

 

Cumulative
Total

1-10

701

10

10

11-20

315

4.5

14.5

21-30

280

4.0

18.5

31-40

210

3.0

21.5

41-50

140

2.0

23.5

51-100

491

7.1

30.6

101-200

603

8.6

39.2

 

 

For the large international valve suppliers these 200 companies represent a big market and one less likely to be made unattractive by local competition. The number of decision makers at these companies is small enough that most sales activity can be with direct employees and not agents.

 

Valve companies can address the new marketing environment with the following initiatives:

 

  • Meet global sourcing with global sales. For a particular project the plant which will use the valves may be in one location. The decision makers in the operating company may be in a different location. The architect engineer and EPC may also be located elsewhere. The valve supplier can interconnect all the sales and application engineering people in a manner to insure the maximum sales opportunity.

 

  • The availability of lowest total cost of ownership data will challenge both end user and supplier to take advantage of it. In a large chemical plant with many processes and thousands of valves the challenge to understand the implications will be substantial despite the best analytics.

 

  • There will be too much available information for generalization. There will be an evolution toward niche experts within both the supplier company and chemical manufacturer.

 

  • Some of this niche expertise will be provided by both large consulting companies and independent experts who will work with both suppliers and owners.

 

  • Valve companies will need to determine the right mix between in-house expertise and paid outside expertise. Large valve companies may be pleasantly surprised regarding the in-house expertise which is available or can be developed.

 

  • This understanding of processes and the lowest total cost of ownership product for each requirement within the process is what McIlvaine calls the Industrial Internet of Wisdom (IIoW). Those valve companies which can best leverage IIoW will be the most successful.


  • Unique collaboration strategies will be available to valve suppliers. Smart valves can incorporate sensors and controls designed by the valve supplier or they can be supplied in collaboration with a controls supplier.


  • To address global sourcing for all the valves for a plant from one source, the valve supplier can either be the main supplier and include valves from his competitors or he can be just one of the suppliers.

 

The new marketing environment for valves in the chemical industry offers big opportunities for those valve companies who best anticipate the rapid changes taking place.

 

 

Bob McIlvaine

President
847 784 0012 ext. 112

www.mcilvainecompany.com