Recently, Metso Corporation has invested more than USD 112.30 million for the development of its engineering hubs in India and internationalize production plants to fulfill the increasing global demand for industrial valves. It has invested around USD 78.61 million of the total investment for the expansion of its operations in India. Metso Corporation recently acquired the Valve Automation division of Rotex Manufacturers and Engineers Private Limited (RMEPL), by acquiring all shares of RMEBS controls Pvt. Ltd. (India). With this move, Metso plans to strengthen its valve network and increase its presence in new industries and application areas. About 20% sales of Metso Corporation come from Metso India, and for the last 4 years, the company has been witnessing a 50% rise in sales. The company is also establishing a new foundry in Vadodara, having the capacity to produce20,000 tonnes, and increasing the mineral equipment capacity of the Metso Park in Alwar, by 35%.
Source: Economic Times and MarketsandMarkets™ Analysis
MarketsandMarkets™ Viewpoint:
Ashish Mishra Associate Manager: Semiconductor and Electronics at MarketsandMarkets™, shares his point of view as mentioned below:
FIGURE 1 INORGANIC STRATEGY SCENARIO FOR VALVE INDUSTRY IN APAC (2013–2017)
Source: Company Website, Press Releases, and MarketsandMarkets™ Analysis
Industry players have been adopting strategies such as acquisitions, agreements, expansions, and contracts. In 2013, 2014, and 2015, only a few deals, including agreements, expansions, and contracts, took place in APAC. After 2015, industry players across APAC have started becoming active toward business expansions. For instance, the expansion strategy cumulatively accounted for a share of 33% in 2016 while 40% in 2017. In APAC, the presence of developing economies such as China, India, and South Korea have driven the adoption of inorganic strategies.
Wier (UK), Emerson (US), HAM-LET Group (Isreal), and Metso Corporation (Finland) are a few major players offering industrial valves. These companies have been trying to increase their presence across APAC through the adoption of inorganic strategies. A few instances showing the same have been provided below.
- In 2017, Metso signed a total of 24 new distributor agreements globally for its valve and valve controls businesses. These agreements cover many countries in Europe, such as the UK, Spain, Croatia, Turkey, France, and Benelux, and include 4 new distributors in India and Brazil. Furthermore, Metso has strengthened its local presence through its collaborations with new partners in China, Korea, and other Southeast Asian countries.
- In 2017, Ham-Let Group, a developer and manufacturer of fittings and valves for a variety of segments and applications in process and ultra-clean industries, announced the completion of the acquisition of 70% of ROVAC Pte, Ltd. (Singapore). The acquisition was completed through the wholly owned Ham-Let Group subsidiary in Singapore.
In APAC, the number of manufacturing and engineering hubs is increasing at a faster pace owing to the rapidly increasing use of industrial valves. Manufacturing activities in APAC are mainly encouraged by the developments in this region in terms of taxation and business rules and augmentation of infrastructure and logistics, , among others, which makes it a favorable place for the business of industrial valves. Additionally, low labor wages in APAC than that of in North America and Europe attract foreign players to build their manufacturing hubs in APAC. A few examples showing the establishment of facilities in APAC have been provided below.
- In 2016, Weir established a new Flow Control division in Malaysia for providing safety-relief valves. The new manufacturing and assembly plant (close to Kuala Lumpur) increased the global reach and competitiveness of Weir.
- In 2017, Emerson opened an advanced additive manufacturing center in Singapore. This is Emerson’s second location to have additive manufacturing capabilities. Additive manufacturing accelerates the testing of multiple versions of a prototype product or part and promises to simplify the production supply chain. Through this center, Emerson uses additive manufacturing technologies to produce customized and application-specific parts and products.
FIGURE 2 OIL & GAS INDUSTRY SCENARIO FOR VALVE INDUSTRY IN APAC (2015–2017)
Source: BP Statistical Review of World Energy 2017 and 2018 and MarketsandMarkets™ Analysis
The oil & gas industry in APAC is rapidly increasing, thereby driving the growth of the industrial valve market. In the oil & gas production industry, countries such as China, India, Indonesia, Malaysia, and Vietnam are at the forefront in the APAC region. China holds the largest share of 50% of the oil and gas production in APAC. Most of the key players in the valve industry including Emerson (US), Wier (UK), and Metso Corporation (Finland) are trying to achieve contracts from oil & gas industry players to strengthen their business in the APAC region. A few examples showing contractual agreements have been provided below.
- In 2017, Metso Corporation received 4 major valve orders for the oil & gas industry from Chinese petrochemical customers. All companies included in this contract have been the top 10 petrochemical companies in China. The orders include approximately 2,500 Neles ball, segment, and butterfly valves for on/off and control applications for coal gasification, ethylene cracking, and pressure swing adsorption (PSA) processes.
- In 2017, NEWAY VALVE CO., LTD. (China) signed the Domestic Subsea Valve contract with Offshore Oil Engineering Co., Ltd. (China) to provide subsea ball valves and subsea gate valves. This contract had a positive impact on the NEWAY VALVE’s valve business and increased its sales.
- In 2016, Velan Inc.’s wholly owned subsidiary, Velan SAS (France), received a contract of USD 36.0 million for the supply of nuclear class valves to China Nuclear Power Engineering Corporation (CNPEC), (China), China Nuclear Power Engineering Co., Ltd. (CNPE) (China), China Nuclear Energy Industry Corporation (CNEIC) (China), and State Nuclear Power Engineering Corporation Ltd. (SNPEC) (China).
Conclusion:
The valve manufacturing industry is showing a steady upward trend with several leading industry players choosing to open their manufacturing units in APAC countries, such as India, China, and Japan. Valve manufacturers in APAC are working together with international valve manufacturers to improve their design and production capabilities. Similarly, the growing oil & gas industry in APAC will increase the demand for industrial valves in the coming year, thereby attracting several valve manufactures to develop leadership presence or expand their local presence. Factors such as favorable taxation, ease of doing business and tax reforms, and augmentation of infrastructure and logistics among others, make India, China, and Japan the most feasible places for industry players to expand their presence in the APAC region.