Whether it is heating process fluids to achieve enough temperature in crude atmospheric and vacuum distillation units, or reaction temperatures inside furnace tubes to produce ethylene, vinyl chloride monomer, synthetic gas and continuous catalytic reformer reactors, or simple process heating (thermal fluid), process furnaces play a critical role in refineries and petrochemical complexes. Process furnaces are mostly qualified as long-lead items or critical items in tenders, so they are often ordered in the early phases of a project.
Over the past few decades, the market for process furnaces has experienced tremendous changes. Mostly driven by efficiency and total cost of ownership (TCO), the process furnace market is strongly influenced by the need for refineries and petrochemical assets to comply with ever tighter environmental standards (e.g., fuels and emissions) and by the growth of petrochemical demand.
Market evolution 2014-2019: Deep shifts in demand. After robust demand, driven by the latest petrochemical growth cycle, the furnace market experienced a strong slowdown in volume--reaching its lowest point in 2017--due to the drop in oil prices in 2014 (FIG. 1). The furnace market has partially recovered but has not reached levels prior to the crisis. In the meantime, client expectations and demand patterns have changed considerably.
The main driver of the furnace market remains cost effectiveness. However, this driver is expressed in two different ways, both which have drastically impacted the market over the last few years. First, on the lower end of the furnace market--mostly cost-driven furnace manufacturers with no technology integration--there is a strong drive towards lower cost execution. This trend is supported by low-cost fabrication and material sourcing--mostly in Asia--and has been driven by large engineering, procurement and construction (EPC) companies primarily under strong pressure from refining and petrochemical producers to reduce their investment costs.
Second, on the higher end of the furnace market--mostly technology integrated furnace manufacturers--there has been an evolution towards the development of a reduction in TCO. This move is leading to more integrated offers, with the objective to improve operations with multiple services. This includes technical services for new assets to integrated revamping approaches in which energy efficiency and compliance with stricter emissions standards are combining to provide higher value to clients. In this...