Supply & Demand Dynamics
Pumps are basic components used in a wide variety of processes, utility and construction-related settings. As a result, demand for pumps is determined by a broad array of variables, most of which are beyond the direct control of pump manufacturers. The demand for pumps tends to be highly cyclical and dependent upon the general economic conditions, which are related to energy prices stimulating capital investment. Primarily, customers are upstream and downstream oil and gas. In addition, a host of other microeconomic variables affect pump supply and demand. These include alternative energy utilisation and pricing patterns, developments in fluid handling pumps and related process control technologies, environmental regulations and various others.
Pump manufacturers, like any other supplier of equipment, typically have a backlog of orders to work through at the time an economic downturn is recognized. At the other extreme, energy-based industries tend to defer capital spending during economic recoveries until their own markets have picked up, slack capacity has been absorbed and available evidence points to the likelihood of sustained expansion.
Trends in production and consumption of oil and gas are therefore important in determining the potential demand for pumps. Oil and gas is an important process industry in its own right and a major application for pumps. The development of refining operations will result in increased demand for pumps in the downstream sector of the Middle East. Saudi Arabia is a significant growth area for the pump market in the oil and gas industry, along with Iraq and Iran.
The most commonly used pumps in the oil and gas industry are centrifugal pumps, many being engineered according to customer specifications. There is an increase in the adoption of positive displacement pumps due to the higher viscosity of crude oil. This makes positive displacement pumps, particularly progressive cavity pumps, ideal in this market. Multi-phase applications across the world are also likely to result in increased demand for positive displacement pumps, particularly twin-screw pumps.
Centrifugal pumps take around 70% of the market, while positive displacement pumps account for 30%. The biggest growth among pump types is expected to be in seal-less magnetically coupled and canned-motor pumps, most of which are centrifugal. Tightening regulations on fugitive emissions in Europe, USA, and Japan, will increase sales of seal-less pumps.