Supply Chain Issues Continue to Impact Valve Costs

Cleveland OH, December 21, 2021 – The cost environment for valve manufacturers was volatile in 2021, finds a new Freedonia Group analysis:

  • In 2020 and 2021, prices surged for both key raw materials (particularly iron ore and steel) and freight services.
  • As a result, valve producers have been forced to hike prices to keep pace with rising production and distribution costs; consequently, average price growth for valves in 2021 is expected to be well above levels in recent years.

The full impact of price increases on end markets remains to be seen, but market recovery in 2021 has been significantly inflated by price growth and recovery in volume terms will be much weaker.

Though iron ore prices have fallen below pre-pandemic highs, steel prices remain elevated and shipping costs and port delays continue to disrupt distribution. Navigating the volatile supply chain will be a key area of focus for valve suppliers seeking to benefit from rebound opportunities in the global economy.

Oil & Gas Market Primed for Rebound

Global demand for industrial valves is forecast to increase 4.9% per year to $103 billion in 2025. Recovery from the impact of the COVID-19 pandemic will fuel sales gains in all markets, with the process manufacturing segment accounting for the largest share of growth.

In particular, the oil and gas market is poised for rebound, having posted the sharpest decline of any major segment in 2020, when the collapse of oil prices in spring of that year led to a steep reduction in industry activity. Drilling rig activity fell precipitously in the US, while the OPEC+ coalition attempted to impose large production cuts on members.

Oil prices rebounded in 2021 as economic activity picked up worldwide, and investment in the global oil and gas industry has risen in turn. Continued recovery is expected through 2025. Many of the global valve market leaders have a particularly heavy emphasis on this market, and the industry will thus remain sensitive to oil and gas volatility.

Want to Learn More?

Global Industrial Valves is now available from the Freedonia Group. This study provides historical data for 2010, 2015, and 2020, and forecasts for 2025 and 2030 for shipments (at the manufactures’ level), demand, imports, and exports in current dollar terms (which are not adjusted for inflation). Demand totals at the country level are also presented in local currency terms. Major product types and markets are also analyzed.

Products:

  • standard multiturn valves
  • standard quarterturn valves
  • other standard – i.e., manually operated – valve products
  • automatic control valves
  • automatic regulator valves
  • separately sold automatic valve actuators

Markets:

  • process manufacturing
  • water infrastructure
  • building construction
  • oil and gas
  • electricity generation
  • all other markets, including mining, shipbuilding, healthcare (excluding artificial heart valves), household and commercial appliances, natural gas utilities, railroad equipment, semiconductors and other discrete parts, and truck tank trailers