U.S. demand for industrial valves will reach $15.2 billion in 2013, an increase of less than one percent, according to a report by the Freedonia Group (www.freedoniagroup.com). Although gains will not match those registered during the 2003-2008 period, slowing growth will largely be due to changes in average valve prices. Freedonia says much of the robust market expansion during the 2003-2008 period was due to value gains supported by price increases, which were caused by rising raw material costs. Through 2013, unit prices are expected to remain flat or drop in response to decreasing raw material costs. In fact, in inflation-adjusted terms, valve demand will strengthen through 2013, bolstered by an acceleration in construction expenditures.
According to Freedonia, U.S. manufacturers face intense competition from overseas producers, with lower-end valves increasingly being made in developing countries with low labor costs and more highly engineered valves manufactured in Western Europe and Japan. As a result, import growth is forecast to outpace that of exports, and the considerable U.S. trade deficit in valves is expected to rise, albeit at a moderating pace.
Freedonia predicts demand for standard valves will outpace that of automatic valves. Freedonia says more buyers will opt to purchase the less expensive standard valves as nonresidential fixed investment slows, possibly upgrading them with separately sold actuators at a later date. Steel and steel alloys are expected to remain the most commonly utilized valve construction materials due to their durability and strong performance in high temperature, high stress applications. Although valve performance will continue to be improved by advances in nontraditional materials (e.g., plastics, titanium and other metal alloys), steel and steel alloys will still make up nearly one-half of valve demand in 2013.
Process manufacturing industries and utilities are the dominant markets for industrial valves because of their heavy fluid handling requirements, according to Freedonia. However, demand gains in these markets will be modest, as production increases in most process manufacturing industries are expected to moderate and growth in utilities construction spending will not be as strong as during the 2003-2008 period. The fastest gains through 2013 will be posted in the construction market, with industrial valve sales expanding 2.4 percent per year. In 2008, original equipment manufacturing applications accounted for more than two-thirds of total industrial valve demand, and this segment is expected to remain the dominant source of valve sales for the foreseeable future, according to Freedonia.