November 2015 - Water Market Insights 172

Top 50 Companies Sell 41 Percent of the Valves While 16,000 Companies Sell the Balance

Sales of industrial valves in 2014 were $56 billion. The top 50 companies generated revenues of $22,900 billion representing 41 percent of the total.

Market shares and sales are continuously compiled by the McIlvaine Company in N028 Industrial Valves: World Market. These rankings are based on the latest 12 month determinations. For public companies, the rankings are based on the latest fiscal year report. For private companies, the rankings are based on the year ending December 31, 2014 or for the most current 12 months as specifically analyzed. Smaller companies are analyzed less frequently than large ones.

The aggregate sales of the individual companies are integrated with market forecasts by valve type, industry and geography. The total sales of aggregated companies equal the total sales in the McIlvaine valve forecast. So actuators and repair parts included as valve revenue by valve suppliers are included in the market totals. On the other hand, actuators or parts sold directly to users by third parties are not included.

The rankings are based on U.S. dollars. So American based companies reporting sales in dollars have moved up in the rankings due to the stronger U.S. currency.

The top five valve companies have average sales of over $1.6 billion each and account for 15 percent of the total sales. The next five companies account for 7 percent of the sales. Therefore, the top 10 companies have 22 percent of the market.

Large valve companies are expanding through acquisitions and organic growth. Purchasers are also expanding geographically and need the support of international valve suppliers. This need is greatest for high performance valves. McIlvaine predicts the concentration of the industrial valve industry generally and particularly for high performance valves will continue. For more information on N028 Industrial Valves: World Market click on: http://home.mcilvainecompany.com/index.php/markets/2-uncategorised/115-n028.

The Top 200 Purchasers Buy More Than 50 Percent of the World’s Water Treatment Chemicals

The largest users of water treatment chemicals are also the industries which are most concentrated. A few oil and gas companies produce most of the oil and gas. Large power companies produce most of the electricity. A few large electronics companies produce most of the semiconductors and flat panel displays. In fact, Samsung is a leader in both products.

Due to the government ownership of wastewater plants in many countries and the growth of third party operators such as Veolia and Suez, the water and wastewater industry is also relatively concentrated in terms of decision makers.

Water treatment chemical producers sell directly to some large users and sell through distributors to others. The percentage purchased by the large users is rising and calls for more focus on this segment by the producers. This is the conclusion reached by McIlvaine Company in N026 Water and Wastewater Treatment Chemicals: World Market.

The 2015 treatment chemical sales will exceed $26 billion. Sales of chemicals to provide ultrapure water (UPW) will be $1.1 billion.

The electronics and power companies dominate the market for ion-exchange resins and other chemicals primarily used with ultrapure water. The UPW chemicals market includes $500 million of purchases by electronics and pharmaceutical manufacturers and $600 million by power plants. However, a few companies dominate the electronics business and they are among the largest UPW treatment chemicals purchasers.

#	Company	Semi	Other Electronic	Power
1	Samsung	x	x
2	Intel	x
3	TSMC	x
4	EDF			x
5	LGE		x
6	Sony	x	x
7	SK Hynix	x
8	Micron	x
9	China Datang			x
10	China Guodian			x

Samsung is the largest UPW treatment chemicals purchaser followed by Intel and TSMC. The largest power purchaser is EDF who ranks fourth.

For polymers and other chemicals used in UPW systems but also used elsewhere, the power plants rank above the semiconductor companies. The power companies are also large purchasers of corrosion inhibitors and anti scalants. Total treatment chemical purchases by power plants in 2015 will be $5 billion of which $3 billion will be spent by the coal-fired power generators.

There is subset of this group which also operates flue gas desulfurization (FGD) systems. This process expands the treatment chemical needs. This group is highly concentrated with just seven companies accounting for 44 percent of the treatment purchases.

Water and Wastewater Treatment Chemical Purchases by Coal-fired Power Companies with FGD
# of Corp	FGD capacity for each MW x 1000	Total MW 1000	% of Total Coal-fired Installed Base	WWTC Purchases $ millions	% of total $26 billion	Examples
7	Over 50	575	44	1,320	5	Big 5 Chinese Corp
10	10-50	150	12	360	1.4	AEP, TVA, Duke, Enel, EON
15	5-10	105	8	240	0.9	NRG, Xcel, Tokyo Electric, Chubu Electric
20	3-5	80	6	180	0.7	AES, EPDC, RWE, CEZ
52	Sub total	910	70	2,100	7
350	0-3	390	30	900	3	U.S., Europe, China
404	Total	1,300	100	3,000	10

These seven companies will spend $1.3 billion for treatment chemicals this year. This represents 5 percent of all treatment chemical purchases. The average per company is 0.8 percent of total purchases. Other industries are also concentrated. The largest 200 companies across the various purchasing industries average more than 0.25 percent of the purchases. So in total they account for more than 50 percent of the market.

The McIlvaine Company has created a program for suppliers to maximize sales to the largest purchasers. It combines the treatment chemicals report with tracking of prospects and projects. Detailed Forecasting of Markets, Prospects and Projects.

Many areas of the world are without adequate natural gas supplies. They can import coal but prefer gas because of its environmental advantages. Renewables do not offer quantities of energy at reasonable cost in the near term. Liquefied natural gas (LNG) can supply the growing energy needs of the developing world. These needs have resulted in plans for LNG gasification, transport and regasification investments exceeding $1 trillion. This is the conclusion reached by the McIlvaine Company in N049 Oil, Gas, Shale and Refining Markets and Projects.

Over the next five years, owners will invest in new facilities generating 120 million tons per year of LNG. Investment costs will vary greatly from site to site depending on location and process. Construction at regasification sites (brownfields) could be as low as $500/ton of annual capacity. Floating liquefied natural gas (FLNG) could exceed $1800/ton.

At an average of $1200/ton, annual purchases will be $29 billion and the five year totals will be $144 billon. Equipment will represent 30 percent of the total or $6.6 billion per year. Nearly 800 MTPA (million tons of LNG per annum) of capacity is in the proposal stage representing investment of nearly $1 trillion.

U.S. projects at existing regasification plants have a competitive edge compared to other proposed projects globally. More than 50 liquefaction projects have been announced. Proposed capacity in the U.S. stood at 269.6 MTPA as of the first quarter of 2015, mostly located in the Gulf of Mexico. Proposed capacity in Canada reached 345 MTPA, including nearly 160 MTPA proposed in 2014 alone.

There are non-economic factors affecting decisions. They include security of supply and political considerations that will impact the investments in many regions. China is a notable example.

In November 2015, China approved a $20 billion pipeline for transporting gasified coal from northern and western China to cities throughout the country. It is designed to handle 30 BCM (billion cubic meters per year). The use of gasified coal will reduce demand for LNG in China. The longer term plan is for as much as 200 BCM. If China is able to gasify coal reliably and economically, there would be a big negative impact on the world LNG market.

McIlvaine will continually evaluate the potential impact of the Chinese coal gasification program and other potential impacts on the market. McIlvaine will also adjust forecasts for filters, pumps, valves, treatment chemicals and other products based on the LNG forecasts. This analysis is then used to analyze the potential of projects reported daily in the program. Here is an example:

• Petroliam Nasional Berhad (PETRONAS), has selected Axens as a technology provider for PETRONAS’ Refinery and Petrochemicals Integrated Development (RAPID) project located in Pengerang, Johor, Malaysia. RAPID is part of PETRONAS’ Pengerang Integrated Complex (PIC) development, which includes six major associated facilities namely the Pengerang Co-generation Plant, Re-gasification Terminal 2, Air Separation Unit, Raw Water Supply Project, Liquid Bulk Terminal as well as central and shared utilities and RAPID is estimated to cost US$16 billion while the associated facilities will involve an investment of about US$11 billion. PIC is poised for its refinery start-up by early 2019.

• Regasification terminal will generate a cryogenic pump opportunity of $1 million and butterfly valve opportunity of $0.5 million. Total flow control and treatment opportunities for the project are over $200 million.

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