Demand from petroleum customers will spike, but import competition will pose a threat.
Los Angeles, CA (PRWEB) August 07, 2013
The past five years highlighted the strong interdependence between the Valve Manufacturing industry and the health of the industrial manufacturing and construction markets. “The recession and its aftermath negatively impacted the construction and manufacturing sectors, causing demand for valves to fall and industry revenue to contract,” says IBISWorld analyst Sarah Turk. Although the recession stifled demand for valves, these downstream markets bounced back nicely as the economy recovered and renewed revenue for the Valve Manufacturing industry. As a result, during the five years to 2013, revenue is forecast to increase at an annualized rate of 3.4 percent to $38.7 billion. In 2013, revenue is forecast to grow at an annualized rate of 4.4 percent.
Valve manufacturers rely on several markets to buy their products, including chemical, petrochemical and petroleum-related industries; construction; power generation and utilities; and water and waste systems. Demand for valves from petroleum refining fell during the past five years, with the forecast annualized growth rate falling 1.6 percent. In 2009, petroleum refiners faced the dichotomy of rising crude prices and weakening demand. Unable to pass crude oil costs to consumers, profit margins for petroleum refining fell 37.6 percent. Due to lower profit margins, petroleum refiners halted investment in infrastructure, which caused demand for valves to plummet. Additionally, power generation utilities' revenue was very volatile during the past five years, discouraging them from investing in utilities improvements including new valve purchases. Utilities construction industry revenue plummeted 16.8 percent in 2009 but has rebounded as the U.S. government invests in upgrading its aging infrastructure. According to Turk, one positive effect of the recession was that it caused the U.S. dollar to depreciate, making industry exports comparatively cheaper abroad. Another benefit of the recession was the drop in the world price of steel, which will fall at a forecast annualized rate of 2.3 percent over the period. Low priced steel, a major input in valves, helped buoy profit margins somewhat despite fluctuations in demand during the past five years.
Over the five-year period to 2018, rising demand from downstream markets will help propel revenue growth. In particular, the construction sector's replacement and upgrades of aging waterways and sewage systems in the U.S. will drive demand. The Valve Manufacturing industry is composed of mostly small firms, with the top four market players only generating 25.1 percent of total revenue. Although the Valve Manufacturing industry has a low market concentration, market leaders command estimated market shares of 14.7 percent and 6.4 percent of total revenue respectively. For more information, visit IBISWorld’s Valve Manufacturing in the U.S. industry report page.
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IBISWorld industry Report Key Topics
Companies in this industry manufacture a variety of industrial and fluid power valves, hose fittings and the associated trimmings. This industry also includes additional metal and plastic plumbing fixtures, such as faucets, flash valves and showerheads.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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