Flow Control and Treatment Companies Will Be Unevenly Impacted by the Chinese
Slowdown and Oil Price Drop
The flow control and treatment market will grow by 2 percent in 2016 to $340
billion. In general small Asian suppliers will achieve the highest percentage
growth. The performance of the large international companies will be mixed.
McIlvaine is analyzing each of the larger companies to compare their forecasts
to the world market trends.
Clarcor will join many other international flow control and treatment companies
who will experience revenue losses in 2016 while the world market increases
modestly. The strength of Clarcor is that a large percentage of the sales come
from consumables rather than capital equipment. The weakness is the low market
shares in Asia and certain other geographies where growth will exceed the
average.
Clarcor anticipates revenues falling by approximately 2 percent in 2016 based on
revenues of $1.4 billion.
Segment World Revenues
($ Millions) Clarcor Revenues
($ Millions)
Clarcor % of World
World % Change
Clarcor % Change
Mobile Filtration 12,000 600 5 4 -4
Stationary Air Filtration 8,000 250 4 -2
Stationary Liquid Filtration including Oil and Gas 10,000 250 -1 -2
Air Pollution Control 10,000 300 3 3 -2
Total 30,000 1,400 3 -2
Mobile filtration revenues will be up worldwide by 4 percent as more vehicles
are driven more miles. The primary growth will be in Asia. The poor quality of
ambient air in Asian countries and the need for air filters in homes and
commercial buildings will help boost stationary air filtration sales by 4
percent.
The stationary liquid filtration sales will be down only modestly due to the
high percentage of consumables in the mix. Oil production will be up in 2016
even if the capital expenditures for new equipment will be down substantially.
Companies such as Clarcor who sell replacement filters will benefit.
Two of the major unknowns and concerns in 2016 are the price of oil and gas and
the status of the Chinese economy. Neither one of these should have a
substantial impact on Clarcor sales due to its mix of products.
The growth in LNG production in the U.S. is a positive factor for Clarcor.
Clarcor expects sales of gas turbine inlet filters to remain flat in 2016 but
the world market will be up by more than 5 percent. This is a combination of
increased power generation but also increases in unit selling prices. High
efficiency filters selling at twice the price of existing medium efficiency
filters can be justified based on improvements in gas turbine operations.
A number of power plants around the world are converting their particulate
control technology from electrostatic precipitators to fabric filters. This
could boost filter sales by more than 20 percent per year when the movement is
fully implemented. The challenge for the BHA group within Clarcor will be to
achieve high market shares in countries such as China, Russia, Chile and Italy
where these conversions are presently taking place.
The McIlvaine Company forecasts market shares and markets for all the products
made by Clarcor in the following publications:
N064 Air/Gas/Water/Fluid Treatment and Control: World Market
N021 World Fabric Filter and Element Market
N022 Air Filtration and Purification World Market
N024 Cartridge Filters: World Market
59EI Gas Turbine and Combined Cycle Supplier Program
N049 Oil, Gas, Shale and Refining Markets and Projects
Coalescing Filters (contact for details)
Mobile Filtration (contact for details)
Precision Forecasting of Flow Control and Treatment
Products is Now Possible
The wealth of available information and the power of the computer now make
possible bottoms-up precision forecasting of product and service revenue rather
than the traditional top-down approach.
Because of rapid changes in key factors such as oil prices or political crises,
it is now possible to economically provide precision forecasting on a
continuously updated basis.
One example is the forecasting of compressors for flue gas desulfurization (FGD)
gypsum formation. Precision forecasting requires a systematic analysis through
each of eight steps.
The first task is to select the product category. In this case it could be all
the blowers and compressors used for this service or just one of the options.
The determination of the type of blower or compressor is a task unto itself.
First one needs to determine the forecast for the product category.
The drivers include expansion of coal-fired power plants, replacement of
existing compressors but also modification of power plants. Many countries have
required retrofitting of FGD to boilers.
China is the largest purchaser of FGD gypsum blowers and compressors. The
country can be divided into nine major combinations of provinces and autonomous
zones to conform to the territory likely to be covered by an individual
salesman.
Increased electricity consumption and the desire for clean air are the basic
drivers behind the compressor purchases, so wealth, population, wants and needs
are all relevant.
Secondary drivers are critical but are the most challenging. The FGD gypsum
compressor is not used in all coal-fired power plants but only those with FGD
systems. The sub process is critical. The dry approach requires no compressors.
The wet approach with natural oxidation does not require compressors. The
incorporating product is also important. One type of scrubber (tray tower) needs
larger compressors than another type of scrubber (spray tower).
Precision forecasting requires that this comprehensive approach be used first
for all the relevant processes, sub processes and incorporating products. When
this data has already been determined, the effort to forecast compressors is
greatly reduced.
Prediction metrics are critical. Failing all else one uses value/value metrics.
A new coal-fired power plant of 1000 MW costs $2 billion. The compressors cost
$1 million, so the forecast for coal-fired power revenues can be multiplied by
.0000005. It is much better to use MW of capacity, gallons of slurry/MW and m3
of air required to obtain the prediction metrics.
The forecasts can be supplied with both revenue and unit numbers and even
average size of units. This is possible because McIlvaine tracks every new
project and existing power plant around the world and can determine average
project size.
The associated revenue is subject to many variables, so establishing the amount
of air required and number of units should be the base forecast. In a country
such as China, the cost of a compressor purchased locally vs. internationally
can be different. But one cannot use general assumptions. Investigation shows
that Chinese purchasers have spent more money for the more reliable and
efficient international compressors.
This choice is partly driven by the higher cost of electricity in China.
Efficiency vs. price is also a factor in the type of compressor or blower
selected. The forecasting is improved if the electricity costs in each
country/state/province are also known and utilized.
Precision forecasting can be achieved by McIlvaine because it integrates all the
products and services used in the $350 billion flow control and treatment market
and because it uses the eight step bottoms-up approach.
For more information click on: Detailed Forecasting of Markets, Prospects and
Projects
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
#1255– January 15, 2016
COAL – US
• Obama Administration halts New Coal Leases on Federal Lands
• LG&E announces Plan to Close and Cap Coal Ash Ponds at Two Power Plants
• Bankruptcy Court approves Arch motions
• Otter Tail Power finishes Major Upgrade at Coal-fired Power Plant in Big
Stone, SD
• KU to invest nearly $700 million to meet EPA’s new Coal Combustion Residuals
Rule
COAL – WORLD
• New Report from the IEA Clean Coal Centre
• EGCO continuing with 500 MW Coal-fired Power Plant Project in the Philippines
• Rukwa Coal receives Three New prospecting Licenses in Tanzania
• Environment Ministry okays New Thermal Power Project in Chennai, India
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.
Bob McIlvaine
President
847-784-0012 ext. 112
rmcilvaine@mcilvainecompany.com
www.mcilvainecompany.com