Prices will stay low despite strong demand
By Staff -- Purchasing, 1/13/2000
The market for industrial valves has been fairly quiet for the past year. Buyers have seen low pricing for all but the most specialized valves, and suppliers believe getting higher prices is going to be tough."We see [downward] pricing pressures from two sources, and we don't see these pressures going away anytime soon," says a valve manufacturer located in the Midwest. "End users are putting pressure on suppliers to reduce prices," he says. Some valve suppliers are even cutting prices, he says. "The industry's profitability is probably suffering as a result."
But while pricing is down, demand for industrial valves is forecast to stay strong. The U.S. industrial valves market will see 5.8% annual demand growth through 2002, barring any drastic change in the performance of the U.S. economy, according to a study from The Freedonia Group, an industrial market analysis group based in Cleveland, Ohio.
Issues driving demand involve ongoing efforts among end users to modernize plant operations and to find new operating efficiencies for their processes.
Also, operating conditions have been getting a little more severe in the past few years. Because of cost pressures, chemical companies are running their processes longer, hotter and under higher pressures in order to get as much out of the process as possible.
"In the past, for a process such as alkylation, plants would schedule maintenance turnarounds at their units every three or four years," says the valve manufacturer. "Now companies are trying to get five or six years of service out of their equipment."
"For this reason, a lot of the processes used in the chemical manufacturing industry require more specialized valves with better efficiencies, and in many cases, valves that offer corrosion resistance," he says.
Along with high-density plastics, stainless steel, hastelloy, zirconium and titanium are some of the more popular valve materials used today that offer corrosion resistance for specialized processes.
Increasingly, buyers are looking to valves with automatic capabilities. More and more, valve buyers are looking to buy valves, automated to function in an on/off basis, as well as being automated to modulate, so that end users can control and adjust the amount of flow. "This has certainly been a trend in the past few years, and companies are responding to that with increased demand for valves that offer these capabilities," says the valve manufacturer.
Other concerns
Environmental and safety concerns also affect buying decisions in the area of valves and related products. "Emmissions of hazardous air pollutants (HAPs) are a big concern for valve buyers," according to an industry insider based on the East Coast.
"One example is if a company is using a hazardous material, such as phosgene, in its process, he says, "You just can't let phosgene emissions leak into the atmosphere."
There has also been a change in the way in which companies are buying valves. "It used to be 'three bids and a buy,' pitting one supplier against another," says the Midwest-based valve manufacturer. "But today we see more and more customers going toward integrated supply deals with valve manufacturers."
He explains that in reducing their number of valve suppliers, customers are essentially writing a specification for a hole in a pipe. They will write specifications for two or three valves to fill that hole in the pipe, and "if you're not in the spec, you're not in the door," he says.
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