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Global Valve and Actuator Market Outlook
Spring 2017
Sample material
Copyright © 2017 Oxford Economics
b
Spring
2017 Contents
Preface [included in sample] i Overview [included in sample] 1
Outlook for valve- and actuator- using sectors
Agriculture 4 Basic Metals 6 Chemicals 8 Construction 11 Food & Beverages 14 Mechanical Engineering 16 Mining 18 Oil & Gas 21 Pulp & Paper 24 Pharmaceuticals 26 Shipbuilding and rail rolling stock [included in sample] 28 Utilities 30
Outlook for national valve and actuator markets
China 33 US 34 Germany 35 Italy 36 France 37 UK 38 India 39 Japan 40 Canada [included in sample] 41 Middle East & Africa 42 Smaller Markets 43
Economic background
US 48 Canada [included in sample] 51 Germany 54 France 57 Italy 60 UK 63 Japan 66 China 69 India 72
Glossary [included in sample] 91 Data methodology [included in sample] 94 Forecast tables 100
Spring
2017 Contents
Economic background (continued) Brazil 75 Austria 78 Belgium 79 Czech Republic 80 Denmark 81 Mexico 82 Netherlands 83 Nigeria 84 Poland 85 Saudi Arabia 86 Singaore 87 South Korea 88 Spain 89 Switzerland 90
Appendices
Page i
Spring
2017 Preface
A new global valve & actuator market forecast report
What’s happening?
Oxford Economics, one of the world’s foremost independent global economic forecasting firms, has been commissioned by BVAA and VMA to produce a valve and actuator market forecast report across 89 countries, 17 end-use sectors and 8 valve and actuator categories.
Why?
An annual market forecast report previously produced by European Industrial Forecasting (EIF) has been discontinued and the firm has ceased operation.
Will the coverage be identical to the EIF report?
Our coverage will be as broad, but not as granular, as in the EIF report. This is by design and follows extensive discussions with BVAA and VMA, who are in complete agreement with our methodological approach as well as the structure and content of the report.
We are not intending to replicate the methodology, coverage and style of analysis of the existing report. Rather, our aim is to produce a set of forecasts that are transparent in their construction and modelling framework, are rigorously underpinned by macroeconomic and sector-specific forecasts, and add maximum value to users in their business planning and decision making.
Will your data be comparable to EIF data?
Readers will notice differences—in some cases considerable—between our estimates of market size and those of EIF. The most significant one is that we estimate market size in China to be orders of magnitude larger than that estimated by EIF, which also makes our estimate of the global valve and actuator market significantly larger.
We strongly believe that the methodologies underlying construction of the data sets and econometric modelling must be transparent and credible. In the spirit of transparency, we invite you to read and the data appendix (which provides details on how we construct our data) and the glossary (which provides details on the definitions and codes for each of the valve and actuator types, as well as definitions of end use markets). They are intended to help readers understand why our estimates of market size may differ from their prior-held views or those published by EIF.
Is there scope to increase the granularity of the forecasts?
Yes, to the extent that we gain access to additional credible market information to underpin them. For this reason, we will hold regular meetings with BVAA, VMA and other key stakeholders to encourage such exchange of information, and well as invest in desk research to search for other sources of information. We expect that this engagement process will allow us to include progressively greater granularity.
Oxford Economics recognises this inaugural report is far from perfect. But it does provide what we believe to be a
solid starting point that will continually improve with each subsequent edition.
Jeremy Leonard Director of Global Industry Services Oxford Economics
May 2017
Spring
2017 Overview
Page 1
GDP
Overview
World: Actuator consumption
Valve and actuator markets shrink in 2016… US$bn Consumption (LHS)
% year
The global valve market is estimated to have shrunk by
2.7% to US$206bn in 2016. This is the second straight year
of decline, but still leaves the market significantly higher than
its levels before the 2008-09 financial crisis—illustrating the
tremendous impact of growth in Asia (China in particular)
over the past decade. All major regions outside of the Middle
East posted declines. Asia-Pacific was the weakest, driven
by a 4% drop in China and a 6.3% drop in Japan. In Europe,
the market was down by a relatively modest 2%, but this
disguises strong growth in Germany being offset by
120
100
80
60
40
20
0
Growth rate (RHS) Forecast 40
35
30
25
20
15
10
5
0
-5
-10
weakness in the UK and Italy. The best performing region
was the Middle East, which expanded 3.3%. This was driven
by a strong 20% growth performance in the UAE (whose
$2.5bn market has become the largest in the region), while
Saudi Arabia saw a 3.8% decline.
2001 2004 2007 2010 2013 2016 2019
Source : Oxford Economics/Haver Analytics
World: Valve consumption
US$bn Consumption (LHS) % year
Actuator markets have seen broadly similar trends at a
global level. 2016’s 3.8% decline leaves the global actuator
market at an estimated US$98bn, off its 2014 peak, but
nonetheless more than double the market size of a decade
ago. Regional patterns broadly mirror those of valves.
…but economic backdrop improving
Forward-looking economic indicators suggest we should see
300
250
200
150
100
50
0
Growth rate (RHS) Forecast 35
30
25
20
15
10
5
0
-5
-10
a rebound in global GDP from last year’s dismal outturn.
activity this year—the global manufacturing PMI has been
steadily rising since August last year and is currently at 3-year
highs. This virtually guarantees that this year’s global GDP will
accelerate from last year’s anaemic 2.3%. However, rising
inflation will cap growth in consumer spending, and we expect
that political factors will limit the rebound in global trade flows
that underpin manufacturing activity. Hence global GDP will
accelerate only modestly to 2.7% this year.
Oil & gas a drag on world industrial outlook
We are forecasting a sharper pick-up in industrial activity
with world industrial production set to accelerate to 2.6% in
2017 from 2% last year and manufacturing expected to
register growth of just over 3%. Of the main valve-customer
sectors, activity in the more cyclical industries, such as
chemicals, mechanical engineering and shipbuilding is
2001 2004 2007 2010 2013 2016 2019
Source : Oxford Economics/Haver Analytics
World: Industrial production and GDP % year
15 Industrial produiction
10
5
0
-5
-10
-15
Forecast
forecast to accelerate more sharply, while growth in less
cyclical sectors such as food & beverages and fuel refining,
albeit healthy, is expected to remain unchanged. The
laggard of the valve-consuming sectors is oil & gas
extraction which in global terms is expected to
contract.
Spring
2017 Overview
Page 2
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
Source : Oxford Economics/Haver Analytics
Spring
2017 Overview
Page 3
Construction
Agriculture Forecast
Oil and gas extraction
Other extraction Forecast
Transport
Basic metals Forecast
There will though be sharp regional differences - budgetary
constraints in oil-producing Middle Eastern countries will
World: Utilities, construction and agriculture
hold back investment and output there, offsetting the
rebound in North American production. World production oil
& gas production should pick up from 2018.
% year
8
6
Utilities
Strong rebound in valve and actuator markets
Against this backdrop of an acceleration in world GDP and
industrial growth, global valve consumption is forecast to
expand by 6.3% this year. Fastest growth is expected in
Asia Pacific where demand is forecast to rise by 8%, driven
by an 8.6% increase (in US dollar terms) in China, the
world’s largest valve market. The rebound in North America
will be more muted, with market growth of just 3.3% being
the weakest of the regions. In the US, uncertainty about
‘Trumponomics’ is weighing on investment, and Canada is
still reeling from the collapse in oilfield investment. In
Europe, all major countries will return to growth apart from
the UK.
The pattern for actuator consumption is broadly similar to
that for valves given the key drivers for both forecasts are
similar. We expect actuator consumption to rise by 6.3% in
2017 after contracting in 2016 with, as with valves, the
strongest growth forecast for Asia Pacific and a contraction
forecast for South America.
Risks weighted to the downside
In the current climate of heightened political and economic
uncertainty, we believe that the risks to our forecasts are
largely skewed to the downside. One of the biggest risks, in
terms of the size of its potential impact on the global valve &
actuator (V&A) market is a sharper economic slowdown in
China, should authorities scale back their growth targets.
V&A consumption in China would be particularly hard hit as
4
2
0
-2
-4
-6
2001 2005 2009 2013 2017 2021
Source : Oxford Economics/Haver Analytics
World: Oil, gas and other extraction % year
12
10
8
6
4
2
0
-2
-4
-6
2001 2005 2009 2013 2017 2021
Source : Oxford Economics/Haver Analytics
World: Chemicals, transport and basic metals
stimulus is scaled back and investment spending curbed.
Weaker import demand would also hit economic activity and
V&A consumption elsewhere, especially in the rest of Asia
which has strong trade links with China. Another key risk to
our forecast relates to the Trump presidency and the
heightened policy uncertainty this brings. Our baseline
assumes his key policies will be partially implemented.
However, lower infrastructure spending, heightened
protectionism and greater uncertainty would cap US growth,
investment spending and V&A consumption. Global growth
% year
20
15
10
5
0
-5
-10
Chemicals
and V&A consumption would also be hit. There is also the
potential for growth and V&A consumption to surprise on the
upside if Trump’s fiscal package is fully implemented but
protectionism and uncertainty remains at bay.
2001 2005 2009 2013 2017 2021
Source : Oxford Economics/Haver Analytics
Spring
2017 Overview
Page 4
Table: Valve market forecasts across global regions and key large national markets (annual growth rates through 2021)
Table: Actuator market forecasts across global regions and key large national markets (annual growth rates through 2021)
reason is persistently sluggish global trade and 10
150 8
overcapacity, which has brought orders for cargo ship s to 6
their lowest levels in more than two decades. 100 4
Near-term trade and freight indicators suggest that the 2
Spring
2017 Shipbuilding and rail rolling stock
Shipbuilding and rail
World: Shipbuilding and rail*Glimmers of hope after a difficult 2016
Global shipping weathered rough seas in 2016, with the
bankruptcy of Hanjin and a massive annual loss at Maersk
epitomising the dismal market conditions. The fundamental
US$, billions
250
200
Real value added output (LHS)
Growth rate (RHS)
% year
Forecast 16
14
12
worst of the container shipping storm is behind us. The
Baltic Dry Index – a closely-watched barometer of
seaborne freight market conditions – has improved
50 0
-2
0 -4
2001 2005 2009 2013 2017 2021 *World refers to the 67 countries
markedly since the beginning of 2017 and is now more
than twice its level of a year ago. Global trade also seems
to be showing signs of life, with orders in key exporting
nations returning to positive territory.
Source : Oxford Economics/Haver Analytics included in the OE industry service
Regarding rail rolling stock (for which passenger traffic is a
much more important determinant of global demand),
market conditions are notably better. Strong demand for
public transit (notably trams and regional rail systems) are
powering strong growth in Asia-Pacific and even the more
mature (and disproportionately large) European market.
Although lower oil prices have increased the attractiveness
of driving on a pure monetary cost basis, worries about air
World: Monthly export indicator Standardised index
2
1
0
-1
-2
Indicator based on
pollution and traffic congestion are providing strong -3
support to railcar manufacturers. -4
In the US (where freight is the dominant use of railway -5
US, German and Chinese export orders surveys
networks), delays on pipeline approvals had buoyed
demand for rail transport as a substitute, but the decline in
production and arrival of a more pipeline-friendly president
means that that demand conditions are more challenging.
Overall, activity in the shipbuilding and rail sector is
expected to accelerate modestly this year to 1.8% growth
after a flat performance in 2016. Further improvements are
expected further out on the expectation of a more
pronounced pickup in global trade – though there are
considerable downside risks to this view should US
President Donald Trump follow through on his more
extreme protectionist measures.
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Source : Oxford Economics/Haver Analytics
World: Container port traffic 100 mil. tons
45
40
35
30
25
20
15
10
5
0
2002 2004 2006 2008 2010 2012 2014 2016
Source: Oxford Economics/Haver Analytics
Page 28
Page 29
Spring
2017 Shipbuilding and rail rolling stock
Table: Forecasts of economic activity in the ship and rail sector across global regions (annual growth rates through 2021)
Table: Valve consumption in the ship and rail end market in 2016, top 20 countries
Page 41
Investment Weighted IP
Actuator consumption (US$)
Spring
2017 Canada
Canada
Oil weakness has weighed on demand
GDP growth in 2016 averaged a sluggish 1.4%, restrained in
large part by the continued adjustment of Canada’s
economy to much lower oil prices. Looking ahead, we
expect that GDP growth will pick up to 1.9% in 2017,
supported by stabilization of energy activity as well as rising
non-energy activity, both of which are supported by
accommodative monetary and fiscal policy and gently rising
oil prices. Beyond this, we expect GDP growth of 1.8% in
2018 and 2019. Industrial production has been weak since 2015, weighed
down by contraction in the large oil and gas extraction sector
in Canada. As a result, overall investment spending has
been contracting for the past two years. This year though,
we are expecting capex to recover after two consecutive
annual declines.
In addition to falling capex in mining, investment spending
Canada: Investment and industrial production % year Forecast
15
10
5
0
-5
-10
-15
2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021
Source : Oxford Economics/Haver Analytics
Canada: Valve and actuator consumption
by the motor vehicle and transportation equipment segments
declined at a double digit pace in 2015-16, in line with
declining output, and is forecast to fall an average of 5% per
year over 2017-18. The weakness in spending by
transportation equipment companies has in turn hit the
mechanical engineering industry’s output and spending.
By contrast, investment spending by the refinery and
chemicals sectors increased significantly over 2015-16, a
beneficiary of ample local supplies of feedstock, and at very
low cost. This has kept overall manufacturing investment
% year
30
20
10
0
-10
-20
-30
Valve consumption (US$) Forecast
flat in 2016, despite the weakness in extraction and
transportation equipment.
These investment trends will continue to weigh upon
demand for valves and actuators in Canada. When
measured in nominal US$ terms, consumption of valves will
slip further in 2017, by 0.2%, before starting a slow recovery
of around 1% growth over 2018-19. Actuator consumption
should do a bit better, recovering 1.1% in 2017 and a
stronger 3.7% in 2018.
2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021
Source : Oxford Economics/Haver Analytics
Forecast for Canada
annual % change
2016 2017 2018 2019 2020 2021
Valve consumption (US$) -4.7 -0.3 0.9 1.3 2.9 3.8
Page 41
Actuator consumption (US$) -9.5 1.1 3.7 0.9 2.8 3.9
Page 51
Forecast for Canada
(Annual percentage changes unless specified)
2016 2017 2018 2019 2020 2021 Domestic Demand 0.9 2.1 1.7 1.7 1.8 1.8
Private Consumption 2.2 2.0 1.7 1.8 1.8 1.8
Fixed Investment -3.2 1.2 1.7 2.0 2.2 2.2
Stockbuilding (% of GDP) -0.1 0.2 0.2 0.2 0.1 0.1
Government Consumption 2.0 1.2 1.6 1.5 1.5 1.5
Exports of Goods and Services 1.1 2.2 2.9 3.2 3.4 3.2
Imports of Goods and Services -1.0 1.8 2.6 3.1 3.1 3.1
GDP 1.4 1.9 1.8 1.8 1.9 1.9
Industrial Production -0.3 2.9 1.2 1.2 1.1 1.0
Consumer Prices 1.4 2.1 2.0 1.8 2.0 2.0
Current Balance (% of GDP) -3.3 -3.0 -2.7 -2.6 -2.5 -2.5
Government Budget (% of GDP) -0.7 -2.0 -1.9 -1.6 -1.3 -1.3
Short-Term Interest Rates (%) 0.83 0.97 1.27 1.55 1.83 2.12
Long-Term Interest Rates (%) 1.25 1.78 1.99 2.21 2.43 2.66
Exchange Rate (Per US$) 1.33 1.31 1.30 1.29 1.27 1.24
Exchange Rate (Yen per Can $) 82.0 88.3 92.2 94.0 95.6 98.1
Spring 2017
Economic Background
Canada
Economy is gaining
momentum, but risks
remain entrenched
Real GDP finished 2016 on a fairly strong note, growing at a 2.6% annualized pace
in Q4. The gain was underpinned by boosts from household consumption
and a one-off decline in imports. In 2016 as a whole GDP growth averaged a
sluggish 1.4%, restrained in large part by the continued adjustment of Canada’s
economy to much lower oil prices. Looking ahead, we expect that GDP growth
will pick up to 1.9% in 2017, supported by rising non-energy activity,
accommodative monetary and fiscal policy and gently rising oil prices.
A stronger performance at the end of 2016 does not mean that the downside risks facing the Canadian economy have moderated. Elevated house prices, overburdened
household balance sheets, possible NAFTA renegotiation, and a renewed decline in
oil prices all continue to pose risks to the outlook.
The latest Bank of Canada policy statement noted that while the economy is gradually
gaining momentum, “significant uncertainties” continue to cloud the outlook. In light of
the risks, we expect the central bank will stay on the sidelines and keep the policy rate
at 0.5% this year.
Our expectation of a widening short-term interest rate differential between US and
Canada should keep the Canadian dollar weak, thereby supporting export growth. It is
notable that exports have largely disappointed expectations since 2014 despite a
more than 10% depreciation of the real trade-weighted exchange rate between mid-
2014 and end-2016. We forecast export volume growth of just over 2% this year,
helped by a weak Canadian dollar and the reawakening of “animal spirits” in the US.
However, persistent drags on structural competitiveness, such as weak productivity
growth, will continue to weigh on Canadian exports.
With higher inflation
squeezing the
consumer, GDP
growth is likely to
slow through 2017
Page 52
Economic Background | Canada
World trade F'cast
Non-fuel export
volumes
Investment
F'cast
Consumption
Long-term
interest rate Short-term
interest rate
Inflation
F'cast
Forecast overview
Fairly sluggish export performance
Export performance was volatile in 2016, with volumes rising
by 9% annualized in Q1. But the Alberta wildfires then led
them to fall 15% in Q2 before rebounding by 9% in Q3.
Export growth momentum then subsided to around 1% in
Q4. But, overall, the performance of non-energy exports was
disappointing in 2016 despite a fairly competitive Canadian
dollar, and it showed the impact of weak external demand,
particularly from the US. We expect overall export volume
growth to only edge up to 2.2% in 2017 from 1.1% last year.
This, though, will still be a stronger performance than
imports – which are projected to grow by 1.8% in 2017 as a
whole, reflecting the impact of the weak C$ and subdued
investment (Canada imports a lot of its industrial machinery).
Subdued growth outlook
Business investment fell 17.4% in Q4, largely due to a
21.7% plunge in nonresidential structures after a boost in Q3
related to the Newfoundland and Labrador oil project. More
generally, business investment declined in 2015 and 2016 in
response to low global oil prices undermining the profitability
of capital spending in the oil and gas sector. However, this
drag should fade in 2017 as oil prices have picked up and
the structural adjustment in the energy sector to lower oil
prices looks to be largely complete. In addition, a more
competitive currency and slowly rising external demand,
mainly in the US, will provide a mild boost in the coming
quarters. We forecast total investment will grow by 1.2% this
year after falling 4.6% in 2015 and a further 3.2% in 2016.
Overall, we expect that GDP growth will accelerate from an
average 1.4% last year to 1.9% in 2017.
Risks to consumer spending ahead
While the drag of falling investment should fade in 2017, the
consumer spending outlook is becoming more uncertain.
Key factors affecting the forecast include:
Weaker labor market dynamics: the economy is still
adding jobs, with the 12-month moving average for
payroll growth at about +24,000 in February, but the
increase is concentrated in a relatively small number of
service sectors.
Canada: Non-fuel exports and world trade % year
25
20
15
10
5
0
-5
-10
-15
-20
-25
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
Source: Oxford Economics
Canada: Consumption and Investment % year
15
10
5
0
-5
-10
-15
-20
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
Source: Oxford Economics
Canada: Monetary policy instruments %
7
6
5
4
3
2
Stagnating real earnings: annual CPI inflation jumped 1
to 2.1% in January and we forecast it will rise at a similar 0
annual pace in 2017. Given modest nominal earnings -1
growth, real wages will struggle to increase this year. 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
Interest rate risk: short-term interest rates remain
pinned down by accommodative Bank of Canada
Source: Oxford Economics
Page 53
Economic Background | Canada
US
Canada
F'cast
monetary policy, which is unlikely to shift in 2017.
However, rising long-term interest rates in the US have
also pushed up Canadian interest rates, posing risks to
the outlook; most notably, rising mortgage rates could
derail housing activity.
Canada: Exchange rate per US$
0.9
1.0
1.1
F'cast
Over the medium term, growth will be influenced by:
Persistent drag from high household debt: over-
indebtedness will remain a concern. We expect
household debt to start falling only in the medium term.
Even then, it will stay well above the level of many other
developed economies – the eventual deleveraging
process will be protracted and serve as a drag on
consumer spending.
Housing sector checked, but not crushed: although
housing starts were relatively strong during in 2016,
supported in part by Bank of Canada policy easing, we
expect them to lose momentum in 2017 as tighter
macroprudential policies aimed at reducing housing
sector risks restrain activity.
Improving external backdrop: while uncertainty
surrounding the policies of the Trump administration will
weigh on the outlook, US domestic demand should
strengthen in 2017. As such, world trade weighted by
Canadian export shares is expected to grow by about 5%
in 2017, up from 0.7% in 2016.
Key-long term advantages
Energy sector opportunities: Canada will benefit from
rising shale gas and oil output in the longer term.
However, a vast outstripping of global supply trends
relative to demand will lead to less vigorous activity in
Canada’s energy sector in the short term.
1.2
1.3
1.4
1.5
1.6
1.7
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
Source: Oxford Economics
US and Canada: GDP % year
6
4
2
0
-2
-4
-6
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
Source: Oxford Economics
Canada: Government balance and debt
Healthy government finances: the budget deficit is small
relative to most developed countries, at around 1% of
GDP. The Trudeau government will ramp up spending to
stimulate the economy but government debt as a
percentage of GDP should fall over time.
% of GDP
4
3
2
1
0
Government
Government
debt (RHS)
% of GDP
140
F'cast 120
100
80
60
Growing labor supply: although slowing, the working age
population is expected to grow at a faster rate than in most
other advanced economies, supporting long-term potential
growth.
-1 balance (LHS)
40
-2 20
-3 0
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
Source: Oxford Economics
Spring
2017 Glossary
Page 91
Definition of market size
We define the national market size (also referred to as “apparent consumption” or simply “consumption”) as:
Market size = domestic production – exports + imports.
Figures are expressed in nominal terms (ie not adjusted for inflation), and are converted to US dollars at current-year exchange rates. Therefore, movements in currencies will have an impact on market size.
Definition of valve types
Our core dataset for valves uses the Harmonised System (HS) of trade classification, since it is the only classification system that is consistent across all countries covered in the report. The data cover valves of all sizes and applications (including for both industrial and household use). Unfortunately, the World Customs Organisation, which administers the HS definitions, offers no more detail on the nomenclature definitions than the names shown in the table below.
HS code Name ID1
8481
Valves
V_Tot
848110
Pressure‐reducing valves
V_Pre
848120
Valves for oleohydraulic or pneumatic transmission
V_O/P
848130
Check valves
V_Che
848140
Safety/relief valves
V_Saf
848180
Other valves
V_Che
848190
Parts
V_Par
One important point is that “valves for oleohydraulic or pneumatic transmission” (meaning valves used specifically in the transmission of “fluid power” in a hydraulic or pneumatic system) may be of any type (for example, pressure- reducing type, check type). Subheading 848120 takes precedence over all other subheadings of heading 8481 in the case of fluid power applications.
Definition of actuator types
For actuators, market data is more challenging because actuators are not coded separately from the system they are actuating. Furthermore, the data make no distinction about whether the actuator is used for a valve assembly or some other application (such as factory automation devices). In agreement with BVAA, we have included the following product codes in our estimates of the actuator market. As a result, the figures in the report will overstate the market size for valve-specific actuators.
NACE code
HS code
Description
Category
27111010 850110 Electric motors of an output not exceeding 37.5W INCLUDING: - synchronous motors not exceeding 18W - universal AC/DC motors - AC and DC motors
Electric Actuator
27111030 850131 DC motors and generators of an output exceeding 37.5W but not exceeding 750W EXCLUDING: - starter motors for internal combustion engine
Electric Actuator
27112230 85014020 Single-phase AC motors of an output not exceeding 750W Electric Actuator
27112250 85014080 Single-phase AC motors of an output exceeding 750W Electric Actuator
28121200 8412298 + 841239 + 841280
Pneumatic and rotating hydraulic motors; other motors not elsewhere specified EXCLUDING: - electric, steam or other vapour turbines, internal combustion piston engines, hydraulic turbines, water wheels, gas turbines
Pneumatic Actuator
28122180 Hydraulic power engines and motors, linear acting `cylinders` (excl. hydraulic systems
Hydraulic Actuator
84123900 Pneumatic power engines and motors (excl. linear acting) Pneumatic Actuator
84123100 Pneumatic power engines and motors, linear-acting, ̀ cylinders` Pneumatic Actuator
Spring
2017 Glossary
Page 92
Additional detail for European countries
In European countries, additional granularity of the Prodcom data allows us to split the “Other valves” category (which is often one of the largest main sectors of valves) into five specific valve types (gate, globe, ball/plug, butterfly and diaphragm). As with the, main categories, these sub-categories include valves of all sizes and applications.
NACE code Title Cat 1 Cat 2 ID
28141333
Other gate valves, of cast iron
Other
Gate
V_Oth_Gat
28141335
Other gate valves, of steel
Other
Gate
V_Oth_Gat
28141337
Other gate valves, other
Other
Gate
V_Oth_Gat
28141353
Globe valves, of cast iron
Other
Globe
V_Oth_Glo
28141355
Globe valves, of steel
Other
Globe
V_Oth_Glo
28141357
Other globe valves
Other
Globe
V_Oth_Glo
28141373
Ball and plug valves
Other
Ball/plug
V_Oth_Bll/Plg
28141375
Butterfly valves
Other
Butterfly
V_Oth_Bfly
28141377
Diaphragm valves
Other
Diaphragm
V_Oth_Dia
Spring
2017 Glossary
Page 93
Definition of end-use markets
We use the NACE revision 2 classification system for our end use sector analysis (which is identical to the ISIC revision 4 and very close to the North American NAICS classification at this level of aggregation). Our data is sourced from GDP by sector data and industrial production data sources from national statistical agencies. More detail on our end-use sector data methodology is available on request.
NACE code Name Description Notes
1 to 3 Agriculture Exploitation of vegetable and animal natural resources, comprising the
activities of growing of crops, raising and breeding of animals, harvesting
of timber and other plants, animals or animal products from a farm or their
natural habitats.
24 Basic metals Activities of smelting and/or refining ferrous and non-ferrous metals from
ore, pig or scrap, using electrometallurgic and other process metallurgic
techniques. Also includes the manufacture of metal alloys and super-alloys
by introducing other chemical elements to pure metals.
20 Chemicals Transformation of organic and inorganic raw materials by a chemical
process and the formation of products. It distinguishes the production of
basic chemicals that constitute the first industry group from the production
of intermediate and end products produced by further processing of basic
chemicals that make up the remaining industry classes.
Broken down into basic
chemicals and other chemicals
41 to 43 Construction General and specialised construction activities for buildings and civil
engineering works. It includes new work, repair, additions and alterations,
the erection of prefabricated buildings or structures on the site and also
construction of a temporary nature. It includes dwellings, office buildings,
stores and other public and utility buildings, farm buildings etc., as well as
civil engineering works such as motorways, streets, bridges, tunnels,
railways, airfields, harbours and other water projects, irrigation systems,
sewerage systems, industrial facilities, pipelines and electric lines, sports
facilities etc
Broken down into residential,
commercial/industrial and
infrastructure
10 to 11 Food &
Beverage
Includes the processing of the products of agriculture, forestry and fishing
into food for humans or animals, and includes the production of various
intermediate products that are not directly food and beverage products.
Beverages include both alcoholic and non-alcoholic drinks.
28 Mechanical
engineering
includes the manufacture of machinery and equipment that act
independently on materials either mechanically or thermally or perform
operations on materials (such as handling, spraying, weighing or packing),
including their mechanical components that produce and apply force, and
any specially manufactured primary parts.
5 and 7 Mining Includes the extraction of coal, other solid mineral fuels and metallic ores
through underground, seabed or open-cast mining, as well as activities
such as crushing, grinding, washing, or compressing leading to a
marketable product
6 and 19 Oil & gas Includes the production of crude petroleum, the mining and extraction of oil
from oil shale and oil sands and the production of natural gas and recovery
of hydrocarbon liquids. This division includes the activities of operating
and/or developing oil and gas field properties. It also includes the
manufacture of liquid or gaseous fuels or other products from crude
petroleum, bituminous minerals or their fractionation products. Petroleum
refining involves one or more of the following activities: fractionation;
straight distillation of crude oil; and cracking.
Broken down into extraction
and refining
17 Pulp & paper This sector comprises (1) manufacture of pulp, involving separating the
cellulose fibres from other matter in wood; (2) manufacture of raw paper,
involving releasing pulp onto a moving wire mesh so as to form a
continuous sheet; (3) conversion of paper into end-use products such as
cardboard, sanitary paper, stationery, wallpaper, etc.
21 Pharmaceuticals Includes the manufacture of basic pharmaceutical products and
pharmaceutical preparations, as well as the manufacture of medicinal
chemical and botanical products
30.1 and 30. Shipbuilding &
rolling stock
Includes (1) the building of ships, boats and other floating structures for
transportation and other commercial purposes, as well as for sports and
recreational purposes; and (2) electric, diesel, steam and other rail
locomotives, passenger rail coaches, freight wagons, tank wagons, self-
discharging vans and wagons, etc.
N/A Other
manufacturing
Residual sector consisting of total manufacturing less basic metals,
chemicals, food & beverage, pulp & paper, pharmaceuticals and
shipbuilding & rolling stock.
35 to 39 Utilities Includes (1) the the activity of providing electric power, natural gas, steam,
hot water and the like through a permanent infrastructure (network) of lines,
mains and pipes; (2) the collection, treatment and distribution of water for
domestic and industrial needs; and (3) operation of sewer systems or
sewage treatment facilities that collect, treat, and dispose of sewage.
Broken down into power
generation and water/sewerage
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Detailed description of data methodology and assumptions
The purpose of this appendix is to enable a broad, high-level understanding of the data construction process, through
providing a high-level description of methodology as well as illustrative examples of the different approaches used to
construct data in selected representative countries. As a result, this appendix provides a roadmap to a general
understanding of the data. However, it should not be taken as a comprehensive guide. Further information on the
assumptions used as part of this work can be found in the supplementary assumptions log. Any further questions on
data can be sent to Oxford Economics.
This appendix is split into two sections:
1. Broad methodological approach;
2. Detailed examples of data construction for selected countries.
Broad methodological approach
We measure market size (technically referred to as “apparent consumption”) as
Apparent consumption = production – exports + imports.
Our methodology and sourcing is split into that used for the trade components of apparent consumption (exports and
imports), and that used to construct national production data.
Trade components (exports, imports)
For all countries, trade data is sourced from the UN trade database (“Comtrade”). This database records customs
data of the value of goods traded between countries. The classification system used for Comtrade is the UN’s
Harmonized System (HS) classification. The classification used for this work, discussed with associations and large
market players, is as follows (note we anticipate that this classification could be amended over time based on
feedback from the industry):
In the below, we will refer to the Comtrade data as our “lead” data source since it is the only source of data
comprehensive enough to include all countries covered in this report. As a result, the limitations of the Comtrade
classification takes priority over more granular data sources that might be available in specific countries when
determining mappings.
Production
There is no single source of production data for the countries covered in this report as there is for trade data.
Therefore, different approaches are used for different countries depending on their available data sources. It is
possible to classify countries into groups which indicate the general methodology used to construct their production
data:
1. European countries;
2. Non-European countries with domestic production that have granular production data;
3. Non-European countries with domestic production that do not have granular production data;
4. Countries whose domestic production is marginal or zero.
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Code Title Cat 1 Cat 2 ID1 ID2
Pressure-reducing
V_Pre
O/P Transmission
V_O/P
O/P Transmission
V_O/P
Pressure-reducing
V_Pre
Pressure-reducing
V_Pre
Check
V_Che
Safety/relief
V_Saf
Other
V_Oth
Other
V_Oth
Other
V_Oth
Other
V_Oth
Other
V_Oth
Other
V_Oth
Other
Gate
V_Oth
V_Oth_Gat
Other
Gate
V_Oth
V_Oth_Gat
Other
Gate
V_Oth
V_Oth_Gat
Other
Globe
V_Oth
V_Oth_Glo
Other
Globe
V_Oth
V_Oth_Glo
Other
Globe
V_Oth
V_Oth_Glo
Other
Ball/plug
V_Oth
V_Oth_Bll/Plg
Other
Butterfly
V_Oth
V_Oth_Bfly
Other
Diaphragm
V_Oth
V_Oth_Dia
Other
V_Oth
Parts
V_Par
European countries:
Eurostat collects detailed production information for very granular industrial sectors for European countries; its
database is called Prodcom. This information is itself collected from National statistical bodies, who implement survey
methods to determine the size and value of production in different industrial sectors. The mapping used is detailed
below and aligns closely with the mapping used for Comtrade (indeed the classification has been designed to accord
with the Comtrade HS classification system since this is our “lead” data source since it covers all countries globally):
28121420 Pressure-reducing valves combined with filters or lubricators
28121450 Valves for the control of oleohydraulic power transmission
28121480 Valves for the control of pneumatic power transmission
28141120 Pressure-reducing valves of cast iron or steel, for pipes, boiler
shells, tanks, vats and the like (excluding those combined with
28141140 Pressure-reducing valves for pipes, boiler shells, tanks, vats and
the like (excluding of cast iron or steel, those combined with
28141160 Check valves for pipes, boiler shells, tanks, vats and the like
28141170 Valves for pneumatic tyres and inner-tubes
28141180 Safety or relief valves for pipes, boiler shells, tanks, vats and the
like
28141233 Mixing valves for sinks, wash basins, bidets, water cisterns etc.
excluding valves for pressure-reducing or
28141235 Taps, cocks and valves for sinks, wash basins, bidets, water
cisterns etc. excluding valves for pressure-reducing/oleohydraulic
28141253 Central heating radiator thermostatic valves
28141255 Central heating radiator valves (excl. thermostatic valves)
28141313 Temperature regulators (excl. thermostatic valves for central
heating radiators)
28141315 Process control valves for pipes, boiler shells, tanks etc. excluding
valves for pressure-reducing or oleohydraulic/pneumatic power
28141333 Other gate valves, of cast iron
28141335 Other gate valves, of steel
28141337 Other gate valves, other
28141353 Globe valves, of cast iron
28141355 Globe valves, of steel
28141357 Other globe valves
28141373 Ball and plug valves
28141375 Butterfly valves
28141377 Diaphragm valves
28141380 Other appliances
28142000 Parts for taps, cocks, valves and similar appliances for pipes,
boiler shells, tanks, vats and the like (including for pressure
These basic codes are combined with a range of assumptions, required due to limitations in the data, to form the
eventual production data.
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One key assumption relates to data omitted by Prodcom to protect company confidentiality. This typically arises in
smaller countries where there are few enough producers such that statistics could reveal private financial information
about individual companies. In such cases, we do the following to fill in the data gaps:
Calculate the share of the product category in question in prior years as a percentage of overall EU
production.
Apply this percentage to the overall level of EU production in the year with missing data to calculate an
estimate of the country’s production for that year.
A further important assumption is made in the context of the additional granularity under “Other “ (V-Oth) cited in the
above table. In this case, we assume that the share of V_Oth of overall production that applies to these detailed
subsectors is the same as that for exports. Hence we use the Prodcom data to split out the trade data from Comtrade
to construct granular trade data.
Non-European countries with domestic production that have granular production data
Outside of Europe, five countries have country specific data sources with granular data for valve production (United
States, Japan, Argentina, Brazil and Malaysia). For these countries, we use this granular data, along with country-
specific assumptions on the mapping of their valve categories (which are typically not classified according to HS) to
the HS classification used by Comtrade, our lead data source.
Non-European countries with domestic production that do not have granular production data
For most non-European producers, national statistical bodies do not collect production information granular enough to
calculate the size on the valve market. As a result, for these countries we source the data on more aggregated
sectors directly from the statistical bodies and then assume that export patterns are an acceptable proxy for domestic
production patterns. Specifically, for each of the valve product types, we do the following:
Calculate valves’ share of total exports in the more aggregated “General purpose machinery” sector of which
valves are a part (NACE 28.1, parts of NAICS 332 and 333).
Apply this export share to our estimates of production in the “General purpose machinery” sector to derive an
estimate of the value of valve production.
Countries whose domestic production is marginal or zero
For these countries (which include most the countries covered) we simply assume that exports equal production since
these countries provide a negligible contribution to the overall global valve market. Thus, apparent consumption
reduces to imports.
Detailed examples
Here we provide one indicative example for each of the four production categories above to illustrate the methods
and assumptions used to construct the data. We interchange between using 2015 and 2010 to illustrate the data. If
readers require more detail on assumptions, we maintain a supplementary assumptions log that we would be happy
to share with interested readers upon request.
European country with domestic production (example: United Kingdom)
As already noted, the UK import and export data come from Comtrade. This shows that the UK valve exports in 2015
were $3,468mn (incl. parts) and imports were $3,326mn (incl. parts).
Production data comes from Eurostat’s Prodcom database. The raw value for 2015 for total valves (incl. parts) was $3,960mn. However, this figure implies that production for domestic consumption is only about $500mn, and that more than 85% of production is exported. This is not consistent with the financial statements of large UK producers. Indeed, for some years of the UK data (and in other EU countries as well), production as measured by Prodcom is lower than exports measured by Comtrade, which is clearly incorrect as production must be at least as large as exports.1
1 Possible exceptions would be trans-shipment hubs (such as the Netherlands), where re-exports could be a factor, but re-exports from the UK are negligible
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There are two main reasons why this might be the case:
Robustness of survey-based data. Data collected via surveys (such as Prodcom) may miss producers or suffer
from non-response and hence are less reliable than administrative data that collects information on all producers.
Import and export data is more comprehensive in this sense since it measures the actual recorded value of goods
that pass through customs, rather than surveys of companies on their exports.
Differences in mapping. It could be the case that the mapping of Prodcom codes is different from the mapping of
Comtrade codes, as these use different industrial classification systems. We compared Prodcom also provides
trade data which we can compare to the Comtrade data to test if our mapping is the same – if the Prodcom trade
numbers match the Comtrade numbers then our mapping must be equivalent. Running this comparison, we
found an almost perfect equivalence between Comtrade and Prodcom trade data. Therefore, this discrepancy
cannot be the result of mapping differences.
To account for such discrepancies, we adjust the Prodcom data, using the “export proxy” assumption regarding
production:
Calculate valves’ share of total exports in the more aggregated “General purpose machinery” sector of which
valves are a part (NACE 28.1, parts of NAICS 332 and 333).
Apply this export share to our estimates of production in the “General purpose machinery” sector to derive an
estimate of the value of valve production.
This results in an estimate of $5,286mn including parts.
This gives our overall estimate for 2015 UK valves including parts: $5,286mn - $3,468mn + $3,326mn = $5,144mn.2
Non-European major/minor producers with additional data (example: United States)
According to Comtrade data, in 2010 the US had exports equal to $7,821m (incl. parts) for the total valve market. For
2010 imports, Comtrade records value for the US of $10,005m again including parts.
The United States has additional information available on valve production from its Annual Survey of Manufactures
(ASM). This survey provides granular information on valve production across subsegments as defined in the NAICS
classification system. The ASM has very different categories compared to the HS classification from Comtrade (our
lead data source). Since there is no complete correspondence table we need to make many different assumptions.
We have used the following methods to verify that the decisions we have made about mappings are valid:
The ASM also has some trade data for some of the product categories. This allows us to check the ASM
trade data against our Comtrade data. If they line up, this suggests that mappings are correct.
From our Comtrade data, we can compute exports in the subsectors as a share of the total valve market. We
would expect to see similar, though not necessarily the same, shares in the Comtrade data as in the ASM
data.
We know that the overall export level for each valve subcategory must be less than the production value for
each valve subsector. Thus, if a mapping yields several subcategories with exports greater than production,
we know there is an issue with the mapping.
There are some imperfect, though useful, correspondence tables available that we have used to inform our
mapping choices.
Even with these checks allowing us to make judgements about whether our mapping is correct or not, it is impossible to know whether the mapping is exact, since surveys differ in the ways they ask for information which may imply that they under or overestimate the data relative to the Comtrade data. Where possible, we are happy to work with the associations and industry to correct the mapping if sensible. Though it is important to note that 100% confidence in the mapping is unlikely to be possible.
2 It is interesting to note that EIF’s estimate for the UK valve market in 2015 (which should be production – exports + imports) is $1.6bn (or about $2bn including parts). But we know from Comtrade that imports alone were $3.3bn. So if the EIF estimate of the UK market is correct, it implies that the difference between production and exports must equal $-1.3bn. In other words, the UK must export $1.3bn more valves than it produces!
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Based on the bulleted methods described in the bullets above, the mapping is shown in the table below. 1s and 2s
indicate where an ASM code (shown in the rows) is used for one of our codes (shown in the columns) – 1s indicate a
high-level category, 2s indicate a category that is part of V_Oth. If a given ASM code is used for multiple of our
categories (i.e. a row has more than one non-zero entry) then it is split across our categories using Comtrade data.
For example, the table shows that ASM code 332911W (“industrial valve manufacturing, nsk, total”) contains parts of
three of our categories: V_Pre, V_Saf and V_Oth. Therefore, the export values of these three categories from
Comtrade are used to create shares adding to 100% - in this case for 2010 we have 9%, 16% and 75% respectively
for V_Pre, V_Saf and V_Oth. These shares are then applied to the overall ASM value for 332911W (which is $254m
in 2010) to form three pieces: $22m, $40m, $192m respectively for V_Pre, V_Saf and V_Oth. These “pieces”,
constructed for all the ASM categories, are summed over our categories (e.g. each of these pieces for V_Pre from all
of the ASM codes are added) to produce the final production values for each of our categories.
ASM Label
Industrial valve manufacturing
ASM Code V_Pre V_O/P V_Che V_Saf V_Oth V_oth_gg V_oth_ball V_oth_bfly V_oth_plug V_oth_nuc V_Par
332911 0 0 0 0 0 0 0 0 0 0 0
Gates, globes, angles, straightway (Y-type) 3329111 0 0 1 0 0 1 0 0 0 0 0
check, stop and check, cross, 3- and 4-way, etc. Industrial valves for water works and 3329113 1 0 0 1 1 0 0 0 0 0 0
municipal equipment (IBBM, AWWA, and UL) Industrial ball valves (all metals, pressures, and 3329115 0 0 0 0 1 0 2 0 0 0 0
types), including manual and power-operated, on-off valves Industrial butterfly valves (all metals, 3329117 0 0 0 0 1 0 0 2 0 0 0
pressures, and types), including manual and power-operated, on-off valves Industrial plug valves (all metals, pressures, 3329119 0 0 0 0 1 0 0 0 2 0 0
and types), including lubricated, cylindrical eccentric, and sleeve-lined All other miscellaneous industrial valves 332911B 1 0 0 1 1 0 0 0 0 0 0
Nuclear valves (N-stamp only) 332911D 0 0 0 0 1 0 0 0 0 2 0
Automatic regulating and control valves and 332911F 1 0 0 1 0 0 0 0 0 0 1
parts (excluding nuclear), power-operated, designed for modulating (throttling) service Solenoid-operated valves and parts, excluding 332911H 0 0 0 0 1 0 0 0 0 0 1
nuclear and fluid power transfer Industrial valve manufacturing, nsk, total
332911W
1
0
0
1
1
0
0
0
0
0
0
Fluid power valve and hose fitting 332912 0 0 0 0 0 0 0 0 0 0 0
manufacturing Aerospace-type hydraulic fluid power valves
3329121
0
0
0
0
0
0
0
0
0
0
0
Aerospace-type pneumatic fluid power valves 3329123 0 0 0 0 0 0 0 0 0 0 0
Nonaerospace-type hydraulic directional 3329125 0 1 0 0 0 0 0 0 0 0 0
control valves Nonaerospace-type hydraulic valves, excluding
3329127
0
0
0
0
0
0
0
0
0
0
0
directional control Nonaerospace-type pneumatic directional
3329129
0
1
0
0
0
0
0
0
0
0
0
control valves Nonaerospace-type pneumatic excluding
332912B
0
0
0
0
0
0
0
0
0
0
0
directional control valves Parts for fluid power valves
332912D
0
0
0
0
0
0
0
0
0
0
1
Fluid power valve and hose fitting 332912W 0 0 0 0 0 0 0 0 0 0 0
manufacturing, nsk, total
The result of this process is a set of production values for each valve subsector, the summation of which is the
production value for the overall valve sector. In 2010, this value is $9,647mn excluding parts, and $11,192mn
including parts. Combining this last value with the Comtrade trade data leaves us with apparent consumption for the
US in 2010 of: $11,192mn – $7,821mn + $10,005mn = $13,376m.
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Non-European major/minor producers without additional data (example: China)
China’s statistical authority produces no information on the overall size of valve production. Furthermore, we have
used a standardised approach to searching for additional data sources, which has not identified further sources of
information for China. Over time we intend to build up more detailed information from the financial information of
Chinese companies – however this approach has limitations: company’s financial reports have patchy data coverage,
often differ from company to company, and are not available for the large number of smaller companies operating in
China. Therefore, this approach of using company financial information to validate or adjust our approach will require
careful assumptions as well as time to build up a database of credible information.
Our current approach is to use simple, transparent assumptions which can be refined over future rounds of this report
as more source information is found and utilised. In this case, the assumption is that the share of valves in Chinese
“general purpose machinery” (excl. “other general purpose machinery”; NACE code 28.1) for production is the same
as that for exports (since we have export data we can rely on from Comtrade). This assumption breaks down into the
following steps:
Take Chinese valve exports as a share of wider Chinese “general purpose machinery” (excl. “other general
purpose machinery”; NACE code 28.1) exports.
Apply this share to China’s production of “general purpose machinery” (NACE code 28.1) to derive an estimate of
China’s production of valves.
Using this transparent approach, gives an estimate for Chinese valve production (2015) of $112,700mn (note this
includes parts, which is 24% of overall valve production). We think this estimate is plausible based on several
comparisons:
Chinese production of “general purpose machinery” (NACE 28.1) was $441,300mn in 2015. Therefore, of this
valves represents roughly a quarter. This is roughly the same percentage as in the US (21%), which does have
detailed production data. In addition to valves, “General purpose machinery” consists of bearings, taps, pumps,
compressors, fluid power equipment and industrial motors. It seems eminently plausible that valves could account
for 25% of this group of products in China.
Chinese valve exports (2015) were $14,600mn according to Comtrade. Therefore, exports are roughly 13% of
overall production. For a country such as China, which has a large manufacturing sector and uses a lot of
machinery, this certainly seems plausible.3 – for overall machinery, Chinese exports were 16% of overall
production in 2016.
Possible sources of uncertainty for this figure however are (1) differences between NACE categories used for
Chinese production and HS categories used by Comtrade; (2) China exports more valves as a share of total
general purpose manufacturing than its overall production.
Therefore, according to the Comtrade data combined with plausible assumptions, China is a very large market—and indeed appears substantially larger than EIF data suggest. The Comtrade data shows that China’s overall exports of valves are $14,600mn, and its imports are $7,200mn. Along with the production figure estimated above, the overall size of the Chinese valve market (2015) is $105,300mn. As noted above, we intend to revise this estimate as we develop more data sources and based on discussions with the valve industry.
Non-producers (example: Saudi Arabia)
For “non-producers” (i.e. countries that have negligible exports of valves), we assume that production is equal to
exports since their domestic production is so small as not to have a strong impact on the global valve market. In the
case of Saudi Arabia this implies:
According to Comtrade data, in 2010 Saudi Arabia’s valve exports were $15mn and valve imports were $843m.
Production is set to equal exports – thus valve production for 2010 is $15mn.
Therefore, valve apparent consumption in 2010 equals £15mn - $15mn + $843mn = $843mn.
3 Applying this exercise to the EIF market size for China implies that 90% of China’s production is destined for export, which is the contrary of our
findings and, in our view, not consistent with the notion that production of valves is primarily destined for the very large and rapidly growing
domestic industrial market.
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