Suppliers have faced rising input costs and strengthening demand, resulting in expanding prices for well cementing services
Los Angeles, CA (PRWEB) March 03, 2015
Well cementing services have a buyer power score of 2.8 out of 5. This score indicates that suppliers have a slight advantage over buyers when negotiating prices and contracts. According to IBISWorld analyst Ian Buchanan, the difficult purchasing environment in the market is largely due to the low level of competition among suppliers, the high level of specialization and the lack of practical alternatives available. However, slowing price growth over the next three years will improve purchasing conditions for buyers.
The market for well cementing services is composed of few vendors and is primarily dominated by the top four vendors, indicating a high level of market share concentration. Top vendors include Schlumberger Ltd., Halliburton Company, Baker Hughes Inc. and Holcim Inc. Using their extensive capital and strong reputation, the four major players in this market are able to influence pricing and keep new vendors from entering the market. As such, competition is low and buyer power is weakened, continues Buchanan. Furthermore, well cementing services have a high level of specialization and require extensive customization for each buyer. The high level of customization hinders the buyer's ability to source multiple vendors that can provide equally effective solutions specific to their operations. Consequently, the limited pool of vendors to choose from weakens competition further and diminishes buyer power. Paired with the high market share concentration and the high level of specialization, buyer power is further reduced due to the lack of alternative options available to buyers. Well cementing services are necessary in the production of oil and gas wells. There are alternatives being researched, but no perfect substitutes have emerged as of yet. The fact that buyers have no other options gives suppliers greater pricing leverage.
Although prices have been rising at a moderate pace over the past three years, suppressed price growth over the next three years will provide buyers with some relief. Critical input costs are projected to grow more slowly, which will contribute to suppressed price growth for well cementing services over the next three years. As such, the pressure on buyers to make hasty purchasing decisions will decrease. For more information, visit IBISWorld’s Well Cementing Services procurement category market research report page.
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IBISWorld Procurement Report Key Topics
Well cementing is an essential part of the oil and gas well construction process; it is typically the last part of the process before pumping equipment is installed. Well cementing ensures the structural integrity of the well, prevents oil and gas from leaking into the ground and isolates different underground layers. Well cementing results in a cement sheath that holds the casing (the pipe through which oil or gas will flow) against the walls of the wellbore (the hole that is drilled for the well). This report discusses the cement, chemicals and services used with on-shore well cementing. The report excludes cement and cementing services used in commercial buildings as well as offshore products and services.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Buying Lead Time
Key RFP Elements
Buyer Power Factors
About IBISWorld Inc.
IBISWorld is one of the world's leading publishers of business intelligence, specializing in Industry research and Procurement research. Since 1971, IBISWorld has provided thoroughly researched, accurate and current business information. With an extensive online portfolio, valued for its depth and scope, IBISWorld’s procurement research reports equip clients with the insight necessary to make better purchasing decisions, faster. Headquartered in Los Angeles, IBISWorld Procurement serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.