Fuelled by the growth in China, India and other developing countries, the positive displacement (PD) pump market in Asia Pacific is expected to witness strong growth over the medium term. Water and wastewater, oil and gas, and the food and beverage sectors are expected to see robust demand growth for PD pumps.
Rapid industrialization and rising standards of living are driving the need for better sanitation, infrastructure and food delivery systems in the developing economies. This is expected to positively impact the growth of the total PD pumps market in this region.
Frost & Sullivan estimates that PD pump market revenues in Asia Pacific will grow at a compound annual growth rate (CAGR) of 14.0 percent; to rise from $2.31 billion in 2012 to $5.09 billion in 2018.
Drilling down further, the PD Pumps market in the combined market of Southeast Asia and Australia & New Zealand generated revenues totalling $650.8 million in 2012. This region is expected to grow at a lower CAGR than the total Asia Pacific market; at around 4.0 percent CAGR through to 2018.
Australia and New Zealand alone accounted for $146.3 million in PD pump market revenues for 2012 across all end-use sectors, growing at a CAGR of 2.3 percent over the period to 2018.
The high-growth markets in the region though, are elsewhere in Asia. China’s 12th 5-year plan calls for extensive energy savings measures, which should provide significant retrofit and service opportunities. Increasing demand from the chemical and oil and gas industries has been the prime driver for PD pumps demand in China. The oil and gas sector in Malaysia, Indonesia and Vietnam is expected to exhibit strong growth as the demand for oil increases and these countries have abundant natural reserves. In India, power generation, oil and gas, and water and wastewater industries are expected to provide good long term growth opportunities. Also, the use of Reverse Osmosis systems is increasing in Asia, and these systems are more likely to use PD pumps than other desalination systems. Perhaps, the one downside in the region has been the sluggish market in Japan that continues to be impacted by the 2011 tsunami natural disaster and the resulting nuclear catastrophe.
In terms of type of pumps, reciprocating pumps appear to show the most volatile growth in the Asia Pacific market, with rotary pumps the most stable. Peristaltic pumps have benefited from expansion in the food and beverage and agriculture markets in this region.
Despite the forecast for strong growth in the region, the PD pump industry faces significant challenges that can hamper market expansion.
Sharp increases in the prices of raw materials and energy have followed economic recovery. This has increased the difficulty amongst PD pump manufacturers to transfer their input costs to end users. The price of PD pumps is expected to remain stable in the short term and this is expected to hurt profitability for PD pump manufacturers.
Innovation a luxury
Major end users constantly aim to upgrade existing technologies with innovative solutions that provide increased energy efficiency, quality, reliability, and performance, with lower operating costs. PD pump manufacturers are therefore, challenged to develop and introduce new products at regular intervals to meet dynamic customer requirements. However, due to economic uncertainty, major PD pump manufacturers have reduced R&D spending; thus hampering their ability to release new products and technologies to the market.
The threat of substitutes
PD pumps are used for high-pressure, low flow-rate applications, and centrifugal pumps are used for high flow-rate applications. For medium flow-rate applications that do not require high pressure, either a centrifugal pump or a PD pump can be used. As centrifugal pumps have a simple design, easy maintenance, and competitive prices, end users prefer using them for medium flow-rate applications. Moreover, within the PD pumps market, different types of pumps can be used for the same application. For example, gear pumps, lobe pumps, and peristaltic pumps can be used for the same food and beverage application. End users are often reluctant to switch to a different type of pump because they are not familiar or comfortable with certain pumps. Manufacturers would need to invest in raising customer awareness about the relative merits and demerits of alternative products and solutions being offered in the market.
Skilled workforce shortage
The industry is experiencing a shortage of skilled technical personnel, which challenges both manufacturers and end users. Manufacturers have been faced with the need to develop pumps with simpler designs that are easy to assemble. Moreover, as end users face a shortage of maintenance personnel, they require intelligent pumps and asset management solutions to improve equipment uptime and reduce maintenance costs. These improvements will likely require manufacturers to develop intelligent pumps and other solutions to gain a competitive advantage in the market.
In other markets
Europe’s sovereign debt crisis continues to hamper growth amongst end-users as they remain wary about investing in new equipment under the current economic situation. While Western Europe is hampered by the Eurozone crisis, Eastern Europe is expected to offer growth potential; driven by the developing economies such as Poland, Hungary and Czech Republic.
North America, while being the most affected by the economic recession, witnessed a strong recovery in 2010 and 2011. End-user industries such as food and beverage, oil and gas and water and wastewater are expected to spur increasing demand for PD pumps. Though negatively affected by political instability in the short term, the Middle East and African markets are expected to experience robust demand growth for PD pumps.