SCUP Report

Table of Contents

Abstract

Most sales of corrosion inhibitors by their basic manufacturers are to service companies that formulate end-use products for the water treatment, lubricants and fuels, metal treatment (including metalworking fluids and rust-preventive oils), and oil field production industries. The end-use products normally contain other functional components, as well as large volumes of solvents and dispersants. Although these service companies are more directly involved than basic manufacturers in the business of solving corrosion problems, the products and the technology of corrosion control are only a part, although an important one, of their overall business. Normally, there is a large markup in the price of the formulated products over the cost of the chemical components alone. This added value reflects the high sales costs, required formulation skills, and technical service that are normally provided.

In most developed economies, such as North America, Western Europe, and Japan, water treatment is the largest market, within which the cooling water segment is the largest. The lubricants and fuels segment is the second largest and is followed by the oil field services and water-based fluids segments. Incidentally, the U.S. pulp and paper industry, which is part of the water treatment segment, accounts for about 2.7% of the total consumption of water treatment chemicals. On an active chemical basis, the consumption of corrosion inhibitors for the pulp and paper industry amounts to about 1% of the total pulp and paper corrosion inhibitor market. Although the corrosion inhibitor treatment level in lubricants is well below 1% and in fuels it is in parts per million, the large-volume use of corrosion inhibitors in this segment is due to its sheer size. Oil and gas services include drilling, cementing and stimulating, production and refining, with the production sector being the largest.

This report describes the major active materials in formulated corrosion inhibitors, their consumption by volume (on a 100% active basis), and their value at the level of sale by the basic manufacturer to the service company. Consequently, the volumes and values reported here cannot be directly compared with those in other studies based on formulated products of widely varying activity sold to end users on the basis of performance and related service. This report also excludes many large-volume, commodity-type inorganic chemicals (e.g., alkali and lime) that are used only for neutralization, as well as boric acid and its salts.

The following pie chart shows world consumption of corrosion inhibitors on a value basis:

World consumption of corrosion inhibitors is expected to grow at an average annual rate of 2.4% during 2008–2013. The relatively low growth rates projected for corrosion inhibitors—all below GDP growth in each region—reflect the high level of maturity of most of the basic industries in the developed markets. They also reflect the replacement of steel by plastics, ceramics, and corrosion-resistant alloys in the industries. Industries have also used corrosion inhibitors more efficiently by employing better monitoring and control techniques in order to minimize discharge in effluent streams and impact on the environment.

During 2008–2013, North American as well as other global markets are expected to experience slow growth, primarily as a result of the current local and global economic downturn. It is estimated that a decrease in chemical demand, which started in the fourth quarter of 2008, will continue at least for the year 2009 and possibly the first half of 2010. A drop in demand of at least 2% for chemicals is expected during 2009, after which demand is projected to normalize, though with reservations. Although the high price of oil has subsided somewhat from its peak in mid-2008, oil production is expected to stay reasonably strong since the price of oil is still relatively high as a result of increasing global demand.

Relatively higher growth rates are expected in the developing regions, the same as in prior years. Particularly, China is expected to show the highest growth because of its rapid growth in industrial production, strong oil production, and the government's new focus on water resources and the announced investment in water treatment.

One major market trend is the positioning of the major Western water treatment companies, such as Nalco, GE, and Ashland, in China. The other major trends in this business are related to regulatory and environmental concerns, which can result in the replacement of some product types by others that are either less toxic or perceived as less threatening to the environment. These issues can relate to the corrosion inhibitors themselves or to developments in the end-use market segment in which they are used.