Process plant market to edge forward
21 Dec 2006
Growth has mainly been driven by increased investment levels in the food & beverage sector, as well as in the water, electricity generation and gas industries, the Manchester-based firm said in a new market report.
Over the next five years, MBD predicts that process plant spending will continue to be dominated by the chemicals sector, followed by water and food & beverage.
The UK chemical industry’s process plant Capex is set to “fluctuate moderately” over the five years to 2011. Investment is expected to decline up to 2008 before increasing moderately in the following two years. The majority of capital investment is expected to continue to be spent on R&D, added MBD.
According to the report, the food & beverage process sector investment will, likewise, register only a modest increase. By the end of 2011, it said, the value of process plant investment is expected to reach £1683 million, representing real term growth of 7% compared with 2006.
“The main focus of capital expenditure is likely to be in new product development, particularly on incremental changes to brand profiles, packaging and associated process changes and productivity improvements, MBD stated.
In the oil & gas industry, capital expenditure is likely to continue to fluctuate year–on-year between 2006 and 2007, while overall capital expenditure is forecast to decline by 3% over the next five years. Process plant investment is, meanwhile, expected to fluctuate moderately, added MBD.
Process plant expenditure by the electricity generating industry is forecast to rise by 9% to 2011. Spending “will to some extent be maintained by the environmental legislation, particularly given the government's commitment to reductions in sulphur emissions,” said the report.
In the water & sewerage industry, process plant expenditure is on track to register an overall increase of 15% in real terms to 2011. Capital funding, MBD forecast, will “be centred on improving the industry assets to maintain the supply and demand balance but also to enhance operation and performance. The impact of the European Directive is also expected to have an effect on process plant expenditure over the next few years.”
Further Capex reductions by the petroleum refining industry are projected over the five years to 2011, with MBD projecting spending to decline 7% to £195 million, including a 10% dip in spending on petroleum refining plant. MBD linked the decline to regulatory effects that “have increased the emphasis on environmental considerations resulting in increased product specifications.”
Capex in the gas supply industry, meanwhile, will show “fairly moderate growth” to 2011 towards an overall increase of 10% in part due to a need for investment in the gas network to cope with greater use of LNG and gas from Europe. New price controls set by Ofgem provide incentives for National Grid Gas to invest in increasing entry capacity to the gas pipeline system, added MBD.
By 2011, MBD forecasts process plant expenditure by the gas supply industry will increase 6% to reach £247 million, with the most significant area of expenditure is expected to be on metering.
