NEWS RELEASE                                   FEBRUARY 2012

World FGD Market to Exceed $7.8 Billion This Year

The market for FGD hardware and components will exceed $7.8 billion in 2012.  When you add another $4 billion for reagents and chemicals the total outlay will be close to $12 billion this year. This is the latest forecast in the ever changing FGD World Markets published by the McIlvaine Company.

                                            World FGD Market $ Millions

World Region                                    2012

Africa                                                       78

CIS                                                             0

East Asia                                             4,743

Eastern Europe                                       320

Middle East                                           109

NAFTA                                               1,854

South & Central America                        37

West Asia                                                 89

Western Europe                                     619

Total                                                    7,849

The big driver will be new coal-fired power plant construction in Asia.  Over the next ten years, the Asian countries will average over 50,000 MW of new coal-fired power plant construction. Some will not have FGD, but they will be offset by Chinese, Korean, Taiwanese and Japanese retrofits and replacements.  The result will be a $5 billion/yr Asian FGD market over the rest of the decade even with the price discounts in China.

In the U.S. there is a growth spurt brought about by the Mercury and Air Toxics Standards (MATS).  This will result in investment in dry sorbent injection (DSI) for those power plants with low sulfur emissions, efficient precipitators and/or precipitators which need replacement. Contrary to popular belief, utilities are unlikely to spend the money for DSI and new fabric filters if the above parameters are missing. The reason is that the combination is as expensive as a wet system which does not require any ESP replacement. Further, the reagent and operating costs will be more with the DSI/fabric combination.

Another parameter is anticipated coal plant life. This, in turn, is a function of the price of natural gas.  Here a distinction needs to be made.  It is not the actual future price of natural gas, but the perception of that price by the utility decision maker.  There could easily be a repetition of the 2000 experience which resulted in the closure of a number of gas-fired power plants.

Uncertainty relative to future regulations is another driver. The DSI injection can be an inexpensive initiative to meet the regulations over the next few years. There are already instances where utilities have elected to choose DSI, but are also planning for longer term wet FGD systems.

Another factor is the perceived ability of the sorbent supplier industry to deliver its product at a reasonable price over the next decade. There was a chicken and egg problem a few years ago.  Lime producers were willing to build new plants but needed assurance that there would be a market for their products. This lack of assured supply led some utilities to select wet limestone. This time around, sorbent suppliers will need some guarantees before making the large investments in manufacturing facilities.

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