2017 Water and Wastewater Treatment Chemicals Purchases Will Exceed $27
Billion
Next year the purchases of water and wastewater treatment chemicals will exceed
$27 billon. This represents the final price to the end user. Much of the revenue
sticks with the companies who mix commodity chemicals to provide custom
treatment. Ecolab and GE Betz are examples of the companies with the expertise
to recommend the right chemical blend and then to furnish it. Much of the value
is generated by the process knowledge of the supplier.
Water and Wastewater Treatment Chemicals Purchases Top of Form
($ Millions)
Industry 2017
Total 27,585
Chemical 921
Electronics 438
Food 889
Metals 927
Mining 538
Oil & Gas 1,055
Other Industries 1,466
Pharmaceutical 389
Power 5,324
Pulp & Paper 1,665
Refining 3,093
Wastewater 4,970
Water 5,910
Municipal wastewater treatment represents the largest single industry segment.
The problems with lead contaminated water in Flint, Michigan underscore the
importance of treatment chemicals for this application.
The power industry is the second largest purchaser. Coal-fired power plants in
China will spend over $1 billion for treatment chemicals in 2017. There are many
supercritical and ultra-supercritical boilers in operation in the country. High
quality treatment chemicals are needed to keep them operating.
Wastewater is a steady growth industry as developing countries are installing
secondary treatment systems and need to purify the discharged wastewater as well
as to dewater sludge.
The oil and gas industry must treat water from various sources including the
produced water which is extracted along with oil. The lack of new drilling sites
is encouraging water treatment since there are fewer options for reintroduction
of the water which is already being produced.
For more information on Water and Wastewater Treatment Chemicals World Market,
click on:
http://home.mcilvainecompany.com/index.php/markets/27-water/449-n026-water-and-wastewater-treatment-chemicals
The Impact of Non-Traditional Needs and Solutions on Pump Industry Profitability
Investors are attracted to pump companies because of the large size of the pump
market and the fact that their products are needed in growing industries such as
water treatment. Investment analysts do a good job of predicting the
profitability of the segments of the market dealing with traditional needs and
traditional solutions but have difficulty anticipating the impact of
non-traditional needs and solutions. The future in the case of non-traditional
needs and solutions will not be an extension of the past.
We are now at the bottom of a pump industry cycle. The fortunes of the companies
focusing on traditional solutions tend to look brighter than the fortunes of
those who rely in part on non-traditional solutions. If we look out five years,
we need to take into account four scenarios.
Pump Needs and Solutions
Need Type Desired Solution
Traditional needs Superior traditional solutions
Traditional needs Superior unique solutions
New needs Market leadership
Creating needs Pro-active development of products and services
The traditional needs are exemplified by the municipal wastewater industry.
Processes are slow to change. Because of the nature of the bidding process,
traditional solutions are encouraged. An oil and gas floating platform lends
itself to unique solutions. A pump requiring less maintenance is valued more
highly when the service engineer has to make a boat trip to make repairs. The
high pressures and unique conditions to which subsea pumps are exposed dictates
new solutions. The development of pumps for energy recovery in desalination
reverse osmosis (RO) plants is one of many examples where a need was created by
a technical development.
As the pump industry rebounds, there will be many opportunities for market
leadership and development of new products and services. Analysts should take
this into account in their assessment of various pump companies.
Xylem and Flowserve are two of the four leading pump companies in the world.
They have different markets and strategies.
Name Pump Sales
($ million) Company Ranking by Sales
Grundfos $3,400 1
Schlumberger $2,430 2
Flowserve $2,400 3
Xylem $2,100 4
Xylem exemplifies a large supplier targeting superior traditional solutions. It
is focused on industries with slow but steady growth. It is the world’s fourth
largest supplier with pump revenues of $2.1 billion. Total revenue in 2015 was
$3.65 billion which was down $200 million from an average of the previous two
years. Despite lower sales, the operating margin was up from 11.8 percent in
2013 to 12.9 percent in 2015. On the other hand, R&D dropped $10 million to $95
million and represented 2.6 percent of sales in 2015.
The 2015 revenue split was 44 percent industrial, 33 percent public utility,
21percent residential and commercial and 2 percent agricultural. Transport
generated 41percent of the revenues and building services 21 percent. The pump
or transport activities are complemented by treatment and test products. More
than 40 percent of revenues come from repair and services. Most of the
industrial revenues come from transport of water. For example, a power plant
extracts river water in the same quantities and manner as does a water utility.
Due to the fact that many of the customers are public utilities, there is an
inherent resistance to change and a focus on initial price rather than total
cost of ownership. Forty-one percent of the present revenues are in the U.S.
compared to only 13 percent in the Asia/Pacific region. Application of superior
traditional solutions leveraged by the U.S. experience offers substantial growth
opportunities in Asia/Pacific.
Flowserve has a business model which lends itself to capitalize on “new needs.”
It focuses on cyclical markets but ones with long-term positive drivers. 2015
sales were $4.6 billion. Oil and gas accounts for 36 percent of sales whereas
“water” accounts for only 4 percent. Thirty percent of Flowserve’s revenues come
from engineered pumps, seals, and systems. Flowserve and Xylem have not competed
with each other since the Xylem/ITT split which resulted in the industrial pump
activity remaining with ITT.
The cycle magnitude has been reduced by the change in mix of orders.
Traditionally new large projects accounted for 20 percent of sales. Now it is
between 10 and 15 percent. Short-term smaller projects such as replacement and
upgrading now account for more than 40 percent of sales. The aftermarket segment
now represents more than 40 percent of sales. The big drop in sales to the oil
and gas industry has reduced earnings but cost reductions have partially offset
the revenue losses.
The challenge for Flowserve and similar companies is to minimize profit
reductions in the low end of the cycle and maximize opportunities at the high
end. Manufacturing migration is one of the steps the company is taking as it
right sizes its assets to deal with geographic market conditions.
Another challenge is to leverage the “engineered solutions” to provide products
with lower total cost of ownership. Life of pump parts in applications such as
fracking is measured in months. So there are major opportunities to
differentiate themselves with superior materials and designs.
The McIlvaine Company analyzes the traditional and non-traditional pump needs
and its impact on the industry in pumps. For more information on N019 Pumps
World Market click on:
http://home.mcilvainecompany.com/index.php/markets/2-uncategorised/116-n019.
Petrochemicals Is a Growth Market for Flow Control and Treatment
2017 will be a good year for those flow control and treatment companies selling
into the petrochemical industry in East Asia. Production for this region will
exceed 45 percent of the world total. There has been growth in the NAFTA region
due to the availability of low cost natural gas, but it does not match the
growth in China.
The investment in flow control and treatment in East Asia will be more than 60
percent of the total because of the feedstock source. A large portion of the
Chinese petrochemicals will be derived from coal-based feedstocks rather than
natural gas. The gasified coal must be filtered to eliminate ash. The acid gases
also need to be removed before they even reach the conventional
gas-to-petrochemicals process. Coal also contains unacceptable levels of mercury
which require carbon beds or ionic impregnated bead beds for removal.
Dehydration requires molecular sieves. Generally, three molecular sieve units
are needed to allow for regeneration. The molecular sieve switching valve is
expensive due to the temperature and corrosion exposure as well as the zeolite
particles.
The large quantities of H2S generated in the coal gasification process require
conversion to sulfur or sulfuric acid. Scrubbers, pumps and valves are all
needed for this process.
The forecasts for flow control and treatment in the petrochemical industry is
addressed in N049 Oil, Gas, Shale and Refining Markets and Projects.
Individual product forecasts for the petrochemical sector are found in:
N008 Scrubber/Adsorber/Biofilter World Markets
N019 Pumps World Market
N028 Industrial Valves: World Market
N021 World Fabric Filter and Element Market
Utility E-Alert Tracks Billions of Dollars of New Coal-fired Power Plants on a
Weekly Basis
Here are some headlines from the Utility E-Alert.
UTILITY E-ALERT
#1268 – April 15, 2016
COAL – US
Peabody Energy files for Bankruptcy
Clyde Bergemann Power Group receives Order for ELG & CCR related Ash Handling
Systems for a Major Utility in South Carolina
Second SCR at Hayden to be completed in 2016
COAL – WORLD
B&W awarded $80 Million Contract to Supply Boiler to Philippines Power Plant
Natural Draft Cooling Tower Order for 450 MW Turow awarded to Hamon
600 MW Coal Gasification Power Plant possible in South Australia
China's Harbin and Saudi ACWA near Loan for Dubai Clean Coal Power Plant
EPTL’s Power Plant Project
The 41F Utility E-Alert is issued weekly and covers the coal-fired projects,
regulations and other information important to the suppliers. It is $950/yr. but
is included in the $3020 42EI Utility Tracking System which has data on every
plant and project plus networking directories and many other features.
McIlvaine Hot Topic Hours (HTH) and Recordings
Explanation Applicable Services Schedule & Registration Sponsored Webinars
McIlvaine conducts periodic webinars which are in a discussion format and are
free of charge to all participants. The displayed material and recordings are
free to purchasers of the products and services and by subscription to others.
Format: 50-90 minute recorded discussion using McIlvaine display material. The
session will be free of charge to all participants but registration is required.
Approach: There are two types of webinars. One is focused on Markets and
directed to suppliers. The other is focused on aiding purchasers make the best
Decisions relative to purchases of flow control and treatment equipment and
services.
Markets HTH
The general overviews of the market including size and major variables will be
discussed with heavy emphasis on technology and regulatory drivers. The
presentation will be based on the latest information appearing in McIlvaine
multi-client reports. Questions and views from both subscribers and
non-subscribers are encouraged.
Decisions HTH
McIlvaine has been publishing information systems on pollution control since
1974. Each subject is organized by the pollutant control technology e.g. fabric
filter, scrubber, etc. There are search capabilities to retrieve information on
any application. The newest addition has been slide deck systems displaying the
issues and options relative to a specific applications. Coal-fired power,
cement, steel and waste combustion decision slide decks are continually updated.
The continually updated slide decks are displayed on the applicable decision
system. It is recommended that participants view the slide deck in advance of
the session and be prepared with questions and views.
Value to purchasers and specifiers: Your questions and interests will be
prioritized in the discussion. You will get a monthly newsletter and have
continuing access to the system and multiple ways to interface in the future
along with a networking directory of suppliers.
Value to Suppliers: You have the opportunity to provide data to be considered at
no charge. If you are also a subscriber you will see the summaries in advance
and be able to shed light on issues and options not properly covered in the
slide deck. If you are a subscriber you will receive the monthly newsletter and
continuing yearly access to the system including networking directories.
44I Power Plant Air Quality Decisions includes 1ABC, 3ABC, 4ABC, 9ABC decision
services but not 2ABC. So those with multiple technologies and at least partial
focus on power will find this combination most cost effective.
Applicable Services for Hot Topic Hours**
Pollutant
Industry Fabric Filter
(1ABC) Scrubber
(2ABC) Precipitator
(4ABC) FGD & DeNOx
(3ABC) Air Pollution
Monitoring
(9ABC) Gas
Turbine
Decisions
Mercury
February
11, 2016 Coal X X
WTE X X X
Sewage X X X
Cement X X
Natural Gas*
DeNOx
March 24, 2016 Coal X X
Incineration X X
Steel X X
Cement X X
Diesel*
Gas Turbine X X
Hot Gas
Filtration Coal X X X X
WTE X X X X
Cement X X X X
Steel X X X X
Incineration X X X X
Coal Gas X X X
GT Intake X
FGD and Acid Gas
June 16, 2016 Coal X X
Sewage X X
WTE X X
Cement X X
Steel X X
*Included in custom system
** Many of the decision guides also are displayed in the relevant market
reports. Power Plant Air Quality Decisions includes 1ABC, 3ABC, 4ABC, 9ABC
HOT TOPIC HOUR (HTH) SCHEDULE
Dates for the next 6 meetings are firm; the others will be held in sequence at
approximately two week intervals. Unforeseen developments could dictate the
insertion of new subjects.
DATE SUBJECT
June 16, 2016
Decisions FGD and Acid Gas Separation - Issue and options for SO2 and other acid
gas separation from coal fired power, cement, steel, and waste incineration
plants. Click Here to Register
TBA
Markets Desalination - Thermal vs. Membrane; energy recovery, pump, valve,
compressor and chemicals options; power/desalination combinations.
TBA
Markets Oil, Gas, Refining - Supply and demand; impact on flow control and
treatment products; regional impacts e.g. subsea in North Atlantic vs. shale in
the US vs. Oil Sands in Canada.
TBA
Markets Food - Analysis of 12 separate applications within food and beverage
with analysis of valve, pump, compressor, filter, analyzer and chemical options;
impact of new technologies such as forward osmosis.
TBA
Markets Municipal Wastewater - Quality of pumps, valves, filters, and analyzers
in Chinese and Asian plants; new pollutant challenges; water purification for
reuse.
TBA
Markets Mobile Emissions - Reduction in CO, VOCs, and particulate in fuels,
oils, and air used in on and off road vehicles; impact of RDE and failure of NOx
traps and the crisis in Europe created by the focus on diesels.
Click here to Register for the Webinars
Sponsored Webinars allow suppliers to take advantage of all the valuable
information on their power point presentations. Click here for details
Hot Topic Hour Recordings
See and hear recordings of past Hot Topic Hours (Free for subscribers, $95.00
for non-subscribers)
• Chronological
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Free Sponsored Webinars
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• AMC Power
• Aquatech
• GE - Mercury Capture
• Honeywell
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• Tekran Instruments - Cement MACT
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Bob McIlvaine
President
847-784-0012 ext 112
rmcilvaine@mcilvainecompany.com
www.mcilvainecompany.com