IHS launches world report on market for hazardous area equipment
18 September 2014
In association with Hazardex, the Industrial Automation group of IHS has run research projects to quantify the market for equipment approved for use in hazardous (explosive) atmospheres since 1995. The latest edition, published in August, is the first to cover the world market, estimated to be worth $8.3 billion in 2013.
The report forecasts this value will grow at 6.4% CAGR (Compound annual growth rate) from 2013 to 2018; and average selling prices are predicted to increase at 0.3% CAGR over the same period.
The forecast takes many factors into account but is highly influenced by capital expenditure in the oil and gas industry, which is estimated to account for around 70% of revenues, against 15% for chemical and pharma, 5% for food & beverage and 10% for other industries.
Most of the capital expenditure forecasts are compiled by specialist industry groups within IHS, which are internationally recognised authorities on their industries.
EMEA is estimated to be the largest value market of the three world regions at $3.5bn in 2013 and $4.8bn in 2018, and is forecast to show steady growth, despite North Sea oil reserves predicted to decline and much uncertainty regarding the political situation in a number of Middle Eastern countries.
However, oil and gas projects are usually long-term operations and continued exploration and the development of new fields is predicted to maintain average growth levels until at least 2018.
One surprising conclusion is that the market for hazardous area equipment in Asia Pacific ($2bn in 2013 and $2.8bn in 2018) is not forecast to grow faster that either EMEA or the Americas ($2.6bn in 2013 and $3.6bn in 2018), as is the case for many other industrial markets studied by IHS.
IHS believes there are many reasons for this, but the slowing of the Chinese economy in recent years and the fact that plant and equipment made in the last 5 to 10 years is now being used in production means that new purchases are being used for replacement and maintenance.
Figure 1. Product areas
The new world report considers a number of product areas as shown in Figure 1, which illustrates the estimated share of the total world revenues for the main product groups in 2013 and predicts how that will have changed by 2018. Of particular note is the increase in the share of market revenues for motors. This is due to the introduction of new regulations designed to save energy which is resulting in average selling prices increasing to account for greater product development and material costs, particularly copper.
Revenues for lighting products are also being affected by product developments. In this case it is the growth in the use of LEDs in both fixed and portable lighting products which have a far longer working life than other lighting technologies. This results in fewer replacements and less routine maintenance being required.
Legislation is a key driver for this market and the new report includes a chapter which provides a summary of the main certification authorities. The estimated share of market revenues for ATEX is 34% , UL & CSA 36.7%, IECEx 12.3% and others 17%. This can only be a guide, as many products are certified by more than one authority. The criteria for approval and the specifications products are tested to can vary considerably between authorities.
ATEX is the dominant authority in EMEA and both UL & CSA in the Americas. Asia Pacific is balanced between the two, but seems more disposed to accept the IECEx standard. In the Americas, UL and CSA approval are well engrained and many US companies require this for plants operating elsewhere, particularly in the oil & gas and chemical industries.
In addition to quantifying the world hazardous area equipment market, the new report also looks at trend forecasts for the years to 2018. These include the growing need for investment in communications within plants as well as between locations. During research, many manufacturers reported receiving requests for wireless solutions.
IHS believes this and other developments will happen, but they will not be rushed as the sector is naturally cautious of change.
To order a copy of Hazardous Area Equipment – World - 2014, please contact John Morse on +44 1933 402255, or email john.morse@ihs.com
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