In-depth Analysis Of China's Valve Industry Development Prospects

- Aug 30, 2019 -

The valve market demand in the oil and gas and energy power sectors accounts for more than 40% of the global industrial valve market demand. Therefore, the following is mainly to analyze the development prospects of the valve industry from the market demand situation of the above two valve downstream industries.

    1. Development prospects of oil and gas valve market

    According to the US Energy Information Administration (EST), global energy consumption will increase by about 53% between 2008 and 2035, and by 2035, oil and natural gas will still account for 52% of total energy consumption. In the short term, it cannot completely replace traditional fossil energy. Therefore, global demand for crude oil and mining will remain basically stable. This will play a strong supporting role in the growth of valve demand in the oil and gas collection field.

    Continued growth in oil and gas production and demand will help maintain a high level of investment in oil and gas pipeline infrastructure. According to Douglas-Westwood, an independent research consultancy in the energy sector, global energy demand is expected to grow by 35% over the next two decades, and natural gas consumption accounts for 26% of total energy consumption by 2030. From 2013 to 2017, the investment in global onshore pipeline projects will reach US$216 billion, and the length of new oil and gas pipelines will reach 270,000 km. The large investment in oil and gas pipelines will drive the continued expansion of demand for industrial valves for oil and gas pipelines, especially for large diameter valves.

    The sustained and rapid growth of the Chinese economy has boosted China's energy demand. China became the world's second-largest oil consumer in 2003, and oil consumption is approaching the United States. Under these conditions, the growth of China's oil and natural gas consumption has significantly exceeded the increase in production, and the gap between supply and demand has continued to expand. From 2000 to 2011, the annual compound growth rate of domestic crude oil consumption was 6.9%, and the compound annual growth rate of production was only 2.1%. In the same period, the annual compound growth rate of domestic natural gas consumption was 16.5%, and the compound annual growth rate of production was 12.6%.

    The year-by-year expansion of the gap between supply and demand has caused China's economic growth to become increasingly dependent on foreign oil and natural gas. According to the statistics of the General Administration of Customs, in 2010, 2011 and 2012, China's crude oil imports were 293.31 million tons, 253.78 million tons and 271.02 million tons, an increase of 17.5%, 6.0% and 6.8% respectively over the same period of last year. Natural gas imports were 9.36 million tons, 12.21 million tons and 14.68 million tons, up 69.1%, 30.4% and 20.3% respectively over the same period last year.

    As an important form of oil and gas transportation, oil and gas pipelines have many advantages such as low leakage, low pollution and high efficiency, and can solve the problem that China's oil and gas imports mainly rely on shipping and improve the energy security environment, so it has become an important part of China's energy strategy. . In the future, China will gradually form an oil and gas import pipeline transportation pattern based on the northeast Sino-Russian oil and gas pipelines, the northwest Sino-Kazakh oil and gas pipelines, and the southwest China-Myanmar oil and gas pipelines.

    In addition, China's domestic energy supply and energy demand distribution are geographically disconnected. Oil and natural gas resources are mainly concentrated in the northeast, north and northwest regions. The Tarim, Qaidam, Shaanxi-Gansu-Ningxia and Sichuan Basins are rich in natural gas resources, accounting for more than 80% of the country's onshore natural gas resources. The demand for energy is mainly concentrated in economically developed areas along the southeast coast. Oil and natural gas resources need to be continuously transported from the northeast, north and northwest regions to the southeast coast. Traditional road, rail and sea transportations have low single-volume, large leakage and large pollution, which is difficult to meet the needs of domestic energy cross-regional deployment. The construction of a complete domestic oil and gas transportation pipeline network to meet the needs of domestic energy cross-regional deployment has become a strategic choice in China's energy sector, including a series of major projects including the first, second and third lines of the West-East Gas Pipeline, which have been implemented or completed. The four-line and five-line lines will also be invested and constructed, and the demand for domestic oil and gas pipeline transportation will further increase in the future.

    The demand for pipeline transportation has stimulated the explosive growth of domestic oil and gas pipeline construction. According to the National Bureau of Statistics, the length of China's oil and gas pipelines increased from 27,600 kilometers in 2001 to 93,000 kilometers in the first half of 2012. However, the length of domestic oil and gas pipelines is still at a relatively low level. In the future, China will build a large number of domestic pipelines and overseas oil and gas input pipelines, and form a relatively systematic oil and gas pipeline network in China. By 2015, China The total length of oil and gas pipelines is expected to reach 140,000 kilometers, "Twelfth Five-Year Plan"

    During this period, oil and gas pipeline investment will remain at a relatively high level, and the market demand for related valves will also achieve rapid growth.

    In addition, with the increasing tension of conventional oil and gas resources, shale gas has gradually become one of the new generation of alternative energy sources as an unconventional natural gas resource. Diesel engine fire pump According to the US Energy Information Administration (EIA) June 2013 assessment of 95 shale gas basins in 41 countries outside the United States, the global technically exploitable shale gas reserves of more than 207 trillion cubic meters Among them, China's technically exploitable shale gas reserves amount to 32 trillion cubic meters, ranking first in the world. In August 2011, the first domestic shale gas horizontal well in Sichuan began experimental mining, which was an important step in the development of shale gas in China. According to the “Shale Gas Development Plan (2011-2015)”, the target production of shale gas in China during the “Twelfth Five-Year Plan” period is 6.5 billion cubic meters. In 2020, the production of shale gas will strive to reach 600-100 billion cubic meters. With the start and rapid development of shale gas mining in China, the purification and transportation of shale gas will bring a large number of valve requirements.

    2. Development prospects of energy and power valve market

    According to the International Energy Agency's "World Energy Outlook? 2012", from 2012 to 2035, to meet the projected energy demand, the required capital investment is 37 trillion US dollars, and the average annual investment is 1.5% of global GDP. From a structural point of view, the investment in the power industry amounted to $17 trillion. Regionally, more than half of the world's energy investment needs come from developing countries.

    China's current electricity consumption is second only to the United States, and it is the second largest power consumer in the world. In 2012, the total electricity consumption was 4.96 trillion kWh. The continuous improvement of China's economic level, as well as the acceleration of industrialization and urbanization, will drive up the level of domestic electricity consumption. According to KPMG's 2010 forecast, the investment required by China's power industry will reach 2.77 trillion US dollars in the next 20 years, equivalent to 1/4 of the total investment of the global energy industry in the same period. The International Energy Agency predicts that China's power investment will account for 23% of the world from 2005 to 2030.

    A large number of energy investments at home and abroad will drive significant growth in demand for industrial valves in the energy and power sector.

    As the nuclear power field in the direction of new energy development, a large number of industrial valve demand will also be generated. According to the "2012 China Power Industry Overview" issued by the China Electricity Council, at the end of 2012, China's nuclear power installed capacity accounted for 1.10% of the total installed capacity, nuclear power generation accounted for 1.97% of the total power generation, and the global nuclear power national average 17 There is still a big gap in the level of %. In the world's major developed countries, nuclear power has become one of the main sources of electricity. As of November 2011, France's nuclear power accounted for 79% of total power generation, South Korea accounted for 30%, Germany accounted for 19%, Japan accounted for At 16%, the United States accounted for 19% and Russia accounted for 16% (source: International Energy Agency-IEA). Compared with developed countries, China's nuclear power industry has a lot of room for development.

    According to the Medium- and Long-Term Development Plan for Nuclear Power (2005-2020), which was officially released in October 2007, China will build about 32 nuclear power plants by 2020, and build a nuclear power plant with a capacity of 40 million kilowatts and 18 million kilowatts under construction. Capacity, built nuclear power installed capacity accounted for 4% of the country's total installed capacity of electricity. The promulgation of the Medium- and Long-Term Development Plan for Nuclear Power (2005-2020) marks the transition of China's nuclear power development strategy from "moderate development" to "active promotion." Regarding the localization policy of nuclear power equipment, the Medium- and Long-Term Development Plan for Nuclear Power (2005-2020) emphasizes that it is necessary to “accelerate the autonomy of nuclear power equipment manufacturing, focus on the design and manufacturing technologies of key equipment, and strive to improve the production capacity of complete sets of equipment”. . According to preliminary estimates, a nuclear power plant with two 1 million kilowatt units can use about 28,000 valves.

    In March 2011, the Fukushima nuclear accident in Japan exposed some weak links in nuclear power safety, which has brought far-reaching impact on the global nuclear power industry. Countries have learned the lessons of the Fukushima nuclear accident and adopted various measures to improve the safety of nuclear power production in the country. . After the Fukushima nuclear accident in Japan, China has taken comprehensive safety inspections and related measures such as suspending the approval of new nuclear power projects before the release of the national nuclear safety plan. The Medium- and Long-Term Development Plan for Nuclear Power (2011-2020) clarifies that during the "Twelfth Five-Year Plan" period, only a small number of fully-recognized nuclear power project sites will be arranged along the coast, and no inland nuclear power projects will be arranged. In the long run, nuclear power is still an inevitable choice for China to ensure energy supply and adjust energy structure. According to the "12th Five-Year National Strategic Emerging Industry Development Plan" issued by the State Council in July 2012, nuclear power as a new energy industry, China will strengthen nuclear power safety, nuclear fuel reprocessing and waste disposal and other technical research to ensure safety. Under the premise, the second-generation nuclear power safe operation technology and life extension technology development will be carried out to accelerate the digestion and absorption of the third generation nuclear power technology and re-innovation, and to coordinate the construction of the third-generation nuclear power plant. By 2015, we will master advanced nuclear power technology, improve the manufacturing capacity of complete sets of equipment, and realize the autonomy of nuclear power development; the installed capacity of nuclear power will reach 40 million kilowatts, and the nuclear power equipment manufacturing capacity including three generations will be stable at more than 10 million kilowatts. Therefore, under the premise of strengthening nuclear safety supervision, the rapid development of China's nuclear power industry and the direction of localization of nuclear power equipment will not change, and domestic nuclear power valve demand will continue to grow steadily.

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