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The advent and convergence of IoT with the process equipment industry is changing the face of the chemicals pumps market entirely, wherein technologies such as equipment monitoring and predictive analysis are eliminating challenges such as unplanned downtime and high unpredictable maintenance costs that are generally acquired in chemical manufacturing. For example, pumps with in-built sensors allow continuous monitoring of quality and throughput as well as prevention of equipment failures by way of real-time, in-memory computing that provides insight to enable near-instantaneous interaction.

Another key challenge that chemical manufacturers face is that, energy takes up maximum share in chemical manufacturing costs. In light of growing stringent regulations, using connected sensors to monitor energy consumption allows better compliance and reduced costs incurred. As the chemicals industry is highly competitive with low margins, it is becoming increasingly important for companies to implement IoT in their processes to control costs and improve efficiency.

NA Chemicals Industry Outlook

Adhesives, paints, and coatings products are currently the biggest generators of demand as well as revenue in North America. Demand for specialty chemicals is primarily fuelled by light vehicle production (increased by 3%) and housing that requires specialized adhesives, paints, and coatings.

The revenue generated in 2017 from the United States specialty chemicals market was approximately $250.0 million. Despite the historical 5.0 to 6.0% annual growth rate, volatility in oil and gas prices will result in a modest growth rate of 1.0% to 3.0% between 2017 and 2018. However, while the basic and polymer chemicals segments continue to grow in terms of volume, specialty chemicals continue to experience the highest growth.

The chemicals industry relies on two big end users: the automotive and construction sectors. During 2015 to 2016, demand from automakers fell in North America due to the fluctuations in the oil prices. In 2017, however, positive growth is expected in the auto industry, which will eventually drive up demand for chemicals. Construction industry has been forecast to grow by over 50% until 2025, wherein, the United States will account for about one-fifth of this growth. The chemicals industry is witnessing growth because of all the infrastructural projects being planned in the region. Because of this, the demand for chemicals will remain high after 2017.

Sectors such as agriculture, Upstream Oil and Gas (O&G), and personal care products are expected to witness steady growth after 2017, and these industries are the biggest adopters of chemicals. With the growing demand from end users, chemicals industry is expected to keep up with production as well as demand for both centrifugal and PD pumps after 2017.

In 2015, $35.00 billion CAPEX was used in the chemicals industry; this includes both basic and specialty chemicals. While projects for basic chemicals are limited to a handful of greenfield projects in the existing setup, several brownfield projects have surfaced for specialty chemicals, as end users are looking to expand their product portfolios. Demand for specialty chemicals is primarily fuelled by light vehicle production (increased by 3%) and housing that requires specialized adhesives, paints, and coatings.

Moreover, low-cost feedstock proximity coupled with a future export scenario incites investments in the Gulf Coast area. During 2013 and 2014, the Louisiana area (Gulf Coast) recorded over 25 investments in petrochemical and specialty chemical projects. Key automation solution providers are also looking to improve their local presence in this region; for example, Emerson Electric Co., is planning to build a 19-acre regional headquarters in Gonzales.

US Specialty Chemicals—Project Mapping

Most of the big specialty chemical projects in the United States that are expected to start in 2017 indicate a greater push toward brownfield capacity expansions. Planned capacity additions that each company has proposed indicates that overall capacity increased by to 2,47,267 tons in 2017, up from 1,73,389 tons in 2016.

The current global specialty chemicals capacity is close to 147 million tons per year of which, the United States alone is responsible for 27 million tons in a year. The key segments of specialty chemicals experiencing a high rate of adoption include paints and coatings, specialty polymers and agrochemicals. The rising adoption of specialty chemicals can be attributed to the increasing number of environmental standards and the coming up of newer product specifications.

Impact on Pumps Market

The performance of the North American pump market in the chemicals industry is greatly influenced by the changes and fluctuations in the oil prices and the oil & gas industry. Pump companies need to focus on boosting aftermarket sales revenue to compensate for the loss in new project sales.

The North American pumps market from chemicals industry witnessed a growth of 0.9%in 2016, after having registered a negative growth trend of (1.5%) in 2015. The chief reason for the decline in growth has been attributed to the drop in oil prices in the fiscal years 2014 through 2016. In the long run, the North America pumps market in the chemicals industry is expected grow at a CAGR of 2.6% between 2016 and 2022, driven chiefly by huge APEX investments in the specialty chemicals segment.

Rising investments in industries such as oil and gas and chemicals, and power generation, as a result of increased natural gas production, will have a positive impact on the overall NA chemicals industry which will, in turn, drive the demand for PD pumps across various applications. The reciprocating pumps segment is primarily driven by the demand for diaphragm pumps from end users from several chemicals manufacturers in North America. Diaphragm pumps are preferred for their flexibility and total isolation of the fluid chamber.

With increasing competition, it has become important for market participants to invest in new technology and expand their product offerings. The expansion of shale extraction in North America has led to accelerated growth in petrochemical production and is driving the valves market in the region. The annual spending on U.S. petrochemical projects is forecast to grow by 8.3% to reach $6.5 billion in 2017 and the centrifugal pumps market for chemical applications will grow at an anticipated CAGR of 2.5% between 2017 and 2022.

The Last Word

  • IoT is fast penetrating the chemicals industry wherein use of connected sensors to monitor energy consumption in chemical manufacturing is helping in controlling costs and energy compliance.
  • The automotive and construction industries will be the key end users contributing toward the growth of the pumps market in the chemicals industry.
  • The construction and manufacturing industries are likely to grow at a fast pace in the forecast period lifted by large projects summing up to $1 billion.
  • The PD pumps segment will witness the highest growth during the forecast period, displaying a CAGR of 2.6% between 2016 and 2022.
  • Replacements and retrofits are expected to continue to offer great opportunities for growth in light of improving economic conditions in the region.
  • The demand for a wider and more effective aftermarket service portfolio is likely to become a key advantage and competitive differentiator.
  • The influx of foreign competitors is increasing pricing pressures on local manufacturers. Manufacturers need to focus on repair and maintenance service capabilities to increase profit margins.
  • Stand-alone pumps are considered as commodity products while complete systems have strong brand recognition. Thus, manufacturers need to focus on providing complete systems.

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Frost & Sullivan’s expert analysts, research experts, and consultants continually evaluate and monitor the Oil & Gas market to develop timely and strategic market intelligence reports which includes growth drivers & restraints, market sizing, market shares, growth rates, competitive analysis, benchmarking, as well as regulatory & technology issues. Through our Oil & Gas Growth Partnership Services program, clients receive a continuous flow of actionable market, technical, and econometric intelligence, and effective strategies for growth. Our global team of market analysts, consultants, and industry experts continuously monitors the market and provides local expertise along with a global perspective.

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About Frost & Sullivan

For six decades, Frost & Sullivan has been world-renowned for its role in helping investors, corporate leaders and governments navigate economic changes and identify disruptive technologies, Mega Trends, new business models and companies to action, resulting in a continuous flow of growth opportunities to drive future success.

Frost & Sullivan

For six decades, Frost & Sullivan has been world-renowned for its role in helping investors, corporate leaders and governments navigate economic changes and identify disruptive technologies, Mega Trends, new business models and companies to action, resulting in a continuous flow of growth opportunities to drive future success.

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