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Emerging markets spurring industrial valve and actuator industry growth

Heavy investments in the upstream, midstream and downstream segments of the oil and gas industry are fuelling the demand for industrial valves and actuators in China, according to new analysis from Frost & Sullivan, Analysis of the Chinese Industrial Valves and Actuators Market.

In 2013, the oil and gas industry was the largest end user for industrial valves and actuators, accounting for 26.5% of total revenues. The industry will remain a key end user in the coming years as low-price, low-emission natural gas will play an important role in China's plan to develop cleaner energy supplies, reduce its reliance on coal, and cope with air pollution.

The analysis finds that the market earned revenues of $4.35 billion (€3.3 billion) in 2013 and estimates this to reach $7.89 billion in 2020. The study covers quarter-turn, multi-turn, control and self-actuating valves as well as electric, pneumatic and hydraulic actuators.

The power generation industry, which is increasingly relying on renewable energy sources and likely to commission new hydroelectric and thermal power plants, is the second-largest end user for industrial valves and actuators in China. With approximately 30 to 50 large national projects in the pipeline for the 2011-2015 period, the outlook for industrial valve and actuator manufacturers is bright.

'The modernisation of infrastructure across end-user industries is also intensifying the need for automation, spurring the replacement of old industrial valves and actuators with advanced equipment,' says Frost & Sullivan Industrial Automation & Process Control Research Analyst Zi Ning Chong. 'These industrial infrastructure upgradation efforts, which have become necessary to reduce energy consumption and overcome other challenges such as resource shortages, are instrumental in driving market expansion.'

However, market fragmentation and strong competition caused by the absence of relevant regulations is leading to pricing pressures and reducing the profitability of valve and actuator manufacturers. Further, the supply of imitations of high-quality valves and actuators by companies operating under the radar has blown consumer confidence in the market. Market prospects are also hit by the Chinese Government's tightening of investment expenditures across industries.

'To survive in this competition-ridden market, manufacturers must leverage quality and reliability as valves and actuators form a part of the critical processing equipment in businesses,' says Chong. 'Integrated solutions and technological advancements designed for specific segments too are necessary to steer the businesses forward.'

For more information on this study, email Julie Zheng, Corporate Communications, at julie.zheng@frost.com.