U.S. demand for valves and pumps remains steady, with sources forecasting another year of growth in 2014, albeit in the single digits when surveyed industry-wide. While much of the demand is driven by North American business, key overseas markets, notably India and China, are experiencing growing demand for pumps for current and anticipated infrastructure and energy and industrial projects.
One source of market information for U.S. producers is the Valve Manufacturers Association of America, or VMA. The organization conducts a monthly State of the Economy survey of members and produces an annual forecast. The results of the March survey, published in VMA's quarterly Valve Magazine, state that shipments by survey participants rose 60 percent that month over February and that 95 percent of respondents expect second-quarter shipments to outpace those in the same period last year.
As a result, VMA is forecasting that the U.S. industrial valve market is on the way to a fifth consecutive year of increases in shipments, the value of which is predicted to reach a record-high $4.4 billion, a 2.3 percent increase over 2013.
This growth is slow and steady but still significant in one key area: the 2013 value of U.S. industrial valve shipments, about $4.3 billion, exceeded the industry's previous 10-year peak in 2008 -- the year the economy collapsed.
VMA reports that in 2014 the chemical industry will have the largest market share of U.S. valve users at 17 percent, followed by water and wastewater at 16 percent, power generation at 13 percent, and petroleum production and petroleum refining at 12 percent each. Other major end-users include pulp and paper at 7 percent, oil and gas transmission at 6 percent, and commercial construction at 5 percent.
All of these figures are little changed from 2013.
The most popular valve choices, according to VMA, remain automated or actuated valves, which last year accounted for $1.3 billion in shipments, about 30 percent of the total.
Another market watcher, investment bank Jordan, Knauff & Co. (JKC), of Chicago, compiles monthly and yearly graphs for its Valve Stock Index and Pump Stock Index. JKC's indices comprise select publicly traded companies weighted by market capitalization, and might not, therefore, be a realistic view of the industry as a whole. The results, however, show heady growth, at least in stock valuation.
The Pump Stock Index rose 31.3 percent in value from June 2013 to June 2014, while the Valve Stock Index increased 13.8 percent during the same period. The S&P 500 Index was up 17.2 percent during the period.
India Is Primed for Pump Growth
Consultant Frost & Sullivan released a report last month that suggests demand for centrifugal pumps in India could be primed by the new government's efforts to boost spending in the industrial, power, and infrastructure sectors.
In a study titled "Analysis of the Centrifugal Pumps Market in India," the Mountain View, Calif.-based consultant states that the market generated revenues of only INR74.6 billion ($1.26 billion) in 2013 and forecasts that it will grow at a compound annual rate of 8.6 percent to INR112.5 billion ($1.91 billion) by 2018.
Frost & Sullivan reports that a number of factors will influence the Indian pump market. These include growing urbanization, which is generating a greater need for water conservation and wastewater management, further development of both the oil and gas and metals and mining sectors, and investments in ports and transportation and power infrastructure.
Replacement sales of centrifugal pumps in India are low due to their long service life. Nevertheless, demand will grow, and the manufacturers most likely to benefit are those that offer innovation and energy-efficient systems and provide "complete engineering and application support" along with "specific services such as energy audits," the consultant advises.
A similar situation exists in China, Frost & Sullivan notes in another new report titled "Chinese Positive Displacement Pumps Market." Ongoing urbanization and infrastructure modernization in the water, wastewater, chemical, and oil and gas sectors are driving demand for positive displacement (PD) pumps.
Frost & Sullivan reports that the PD pump market (which includes rotary, reciprocating, and peristaltic pumps) generated revenues of $1.19 billion in China last year and is on track to reach $2.01 billion in 2018. The consultant says that 30 to 50 major national industrial projects are slated for approval through 2015, and these will generate demand for PD pumps. The most lucrative projects will be in the oil and gas industry, as well as the chemicals industry, where PD pumps are preferred for their high-pressure and high-viscosity operating capabilities.
Competition is emerging from centrifugal pumps in many applications, however, owing to their lower cost, easy installation, and versatility. While price is an important selling point, Frost & Sullivan says that "post-purchase technical support and value-added services are also crucial" for PD pump producers in maintaining their bottom lines against the growth of centrifugal pumps.
Ongoing investments in energy and chemicals are among the end-uses driving global valve and pump sales. Credit: GE Oil & Gas