NEWS RELEASE                                   MAY 2005

World FGD Orders to Peak Next Year at $11 Billion

During the 1990s annual sales of power plant flue gas desulfurization systems (FGD) were less than $1 billion/yr globally.  Last year they were over $7 billion, and by 2006 will be $11 billion.  This is the latest prediction in the continually updated, FGD World Markets, an online report published by the McIlvaine Company of Northfield, IL.

Even after the 2006 peak, sales in 2007 will be a respectable $7.5 billion and will then rise again to $9 billion in 2008.  While the present market is driven by regulations to retrofit at existing plants, the long-term market will be bolstered by substantial construction of new coal-fired plants in all regions of the world.

There will be more new FGD systems installed in China than in any other country over the next decade.  The second largest market is the U.S. as a result of the recently promulgated Clean Air Interstate Rule.  The near-term market has grown due to the price of allowances.  Duke Power is accelerating construction of five scrubbers into the 2009 timeframe instead of 2011 due to the high priced credits.

There are many beneficiaries from this large revenue stream.  Engineering firms are one group.  Revenues for these companies will exceed $1 billion/yr.  Shaw just announced an expansion of its Charlotte, N.C. facilities to handle an anticipated large FGD work load.

Suppliers of nickel alloy steel, FRP, and other corrosion resistant materials will be enjoying a market of over $1 billion/yr for their products.  Sales of dampers, fans, and expansion joints will exceed $0.5 billion in the peak year of 2006.  In that year sales of pumps, valves, and filtration equipment associated with FGD slurries will exceed $0.4 billion.

Sales for the system suppliers such as Alstom, Chiyoda, Mitsubishi (Advatech included), Hitachi, B&W, Wheelabrator, Babcock, Marsulex, IHI, and Lurgi Lentjes, will exceed $5 billion/yr in 2006.

Sales of lime to this market will climb to over $600 million/yr by 2008.  There is also a substantial market for other chemicals for improved gas cleaning as well as wastewater treatment.

Sales of instrumentation and software to this marketplace will exceed $0.5 billion in 2006.  This includes optimization software, air monitoring instrumentation, and process instrumentation for the solids and slurries as well as the flue gas.

The market for gypsum wallboard will be transformed as FGD byproduct gypsum becomes the primary source for wallboard manufacturers.

Consolidation of the market will occur in Europe and the U.S., but the reduction in the number of players will be more than offset by new entries in Asia.  Nearly all the systems presently being built in China are by consortia with U.S, Japanese, and European companies providing the process technology but Chinese companies providing the detailed engineering and construction.

It is inevitable that this huge Chinese market will result in new participants in the worldwide market.  McIlvaine cites the sudden market in Germany in the early 1980s as an example.  Prior to this activity, U.S. and Japanese suppliers controlled the world market.  After the surge, five German companies entered the world market.

For more information on FGD World Markets click on: http://www.mcilvainecompany.com/air.html#NO27