Study: Europe, Mideast petrochemical market demand fuels water treatment sales

The total water and wastewater treatment equipment market for the petrochemicals industry in Europe and the Middle East was estimated at US$390 million in 2004. Spurred by growing demand from the Middle East and parts of Europe, the overall market is forecast to be worth US$534 million in 2011. That's a 37% shift for water and wastewater equipment suppliers, according to Frost & Sullivan...

LONDON, March 11, 2005 (PRNewswire) -- The total water and wastewater treatment equipment market for the petrochemicals industry in Europe and the Middle East was estimated at US$390 million in 2004. Spurred by growing demand from the Middle East and parts of Europe, the overall market is forecast to be worth US$534 million in 2011.

Compliance with environment-friendly legislations such as the Integrated Pollution Prevention Control (IPPC) is set to drive market development in Europe, as well as an expanding petrochemicals base, are set to boost demand for water and wastewater treatment equipment in the Middle East. Uptake levels are also likely to be driven by the rising costs of sourcing water and disposing effluents and the public pressure to control related environmental and health hazards.

Motivated by the stricter regulatory regimes governing effluent discharge and wastewater treatment, Europe currently accounts for nearly 50.3 per cent of total market revenues. Enhanced demand in the newer markets of Benelux, Spain and Italy, together with the need for replacement and upgrades in more mature markets such as Germany, have also supported market growth.

Driven by a fast expanding petrochemical industry and the associated rise in demand for water and wastewater treatment equipment, the Middle East is expected to overtake Europe as the larger regional revenue contributor over the long term. Growth is expected to be particularly strong in Saudi Arabia, Iran, United Arab Emirates, Kuwait and Qatar.

"There is a need for regionally focused strategies and international expansion given the disparity in the life-cycle stages and subtle differences in solution needs across the petrochemicals industry," advises Frost & Sullivan Research Analyst Suchitra Padmanabhan. "Successful water and wastewater treatment suppliers should aim to cater for the local replacement and service market needs in the mature parts of Europe while looking to exploit the escalating industrial growth and conditions of salty water sources in southern Europe and the Middle East."

Regional particularities have been pronounced in terms of outsourcing trends. At present, the nearly US$20 million outsourcing market has been confined to Europe. While outsourcing is anticipated to take off in the Middle East only in the long term, demand for outsourcing is expected to spread from the United Kingdom, France and Benelux to new countries such as Iberia and Italy and sustain an estimated 20.2 per cent compound annual growth rate (CAGR) from 2004 to 2011.

Demineralization technology (through ion exchange) currently dominates the clean water segment with desalination membrane filtration systems (reverse osmosis) exhibiting strong growth potential. Indeed, underpinned by an ever expanding market for reverse osmosis in the Middle East, the overall petrochemical water segment is set to grow more rapidly than its wastewater management counterpart.

Within principal wastewater treatment technologies, secondary treatment (driven primarily by biological treatment technologies) contributes just under three quarters of the segment revenues. Revenues of tertiary treatment technologies, while currently small, are set to rise following wider penetration of more advanced solutions.

With over 150 participants, the petrochemicals water and wastewater treatment equipment market in Europe and the Middle East remains relatively fragmented. International companies are the competitive leaders, with the market controlled by the France-based international contractors Veolia Water systems and Ondeo Industrial Solutions (OIS).

Competition is set to intensify and greater consolidation likely to occur as the market approaches maturity. Key competitive factors are likely to be pricing and -- as specialist knowledge grows - the ability to meet customer's requirements. While traditionally the market has been a buyer's one where end-users dictate the use of technology and price levels to a large extent, strengthening regulations are likely to reduce this inequity.

Overall, the market promises to offer challenging yet innovative growth possibilities for turnkey plant suppliers, treatment equipment manufacturers and service providers. "Future opportunities for turnkey operators are emerging in the outsourcing segment though this involves a high degree of commitment in terms of resources, both finances and time," notes Ms. Padmanabhan. "For OEMs, the market suggests necessary developments of unique technical expertise or involvement in niche specialist markets."

Further details of the report, "European and Middle Eastern Water and Wastewater Management Markets in the Petrochemicals Industry" (Code: B443-15), can be found at http://water.frost.com. You can also request a summary by emailing magdalena.oberland@frost.com.

Frost & Sullivan (www.frost.com), a global growth consulting company founded in 1961, partners with clients to create value through innovative growth strategies. Bringing to its clients is a global perspective on a broad range of industries, markets, technologies, econometrics and demographics, the company provides industry research, marketing strategies, consulting and training to help them grow their business. Its client list includes Global 1000 companies, emerging companies as well as the investment community.

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