Fluctuating forecasts for process plant
13 Apr 2000
On a sector by sector basis, the demand for process plant remains as variable as ever, according to the latest market development forecasts published by research company Market and Business Development.
After strong levels of capital expenditure by the chemicals sector in recent years, MBD estimate a 5 per cent reduction to £2500million for last year, although this still represents an overall increase of 20 per cent compared with 1995. The process plant element of this expenditure, however, is expected to fall to £1622million in 2003, but with a 3 per cent increase anticipated for the following year.
In another industry where plant costs represent a high proportion of total capital expenditure, petroleum refining, process plant investment levels have fluctuated considerably over the last five years. MBD estimates that expenditure was increased in 1995 by 20 per cent to £260million, followed by heavy reductions of 39 and 12 per cent respectively in 1997 and 1998. But last year there was a 73 per cent upturn in plant expenditure. Given the industry's cyclicity, MBD says such levels can be expected to be slowly eroded throughout its five-year forecast period, falling to just £70million by 2004.
On the other hand, against a background of overall low levels of real capital expenditure growth, the food and drink industry is expected to consistently increase its spend on process plant over the short term. In a reasonably mature market in terms of overall consumption, the increased spend on plant is said to reflect modification and modernisation of existing plant, combined with new investment in alternative product areas.
A 'consistent level of reduction' can be expected in water and sewerage investment, however, following growth over the past few years. MBD expects this to persist throughout its review period, although the forecast could alter 'significantly' by the industry's price limitation review which is yet to be finalised but will be operative after this year.
The 'UK Process Plant Market Development' report is available at £360 for a single copy, or £520 for an annual subscription including quarterly updates.
