Isra-Mart srl:Rising Mineral Prices and Global Demand Boost the Mining, Oil and Gas Machinery Industry

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After a volatile period between 2006 and 2011, firms in the Mining, Oil and Gas Machinery Manufacturing industry are projected to enjoy smoother conditions between 2012 and 2016, with rising commodity prices underpinning stronger demand for new equipment, according to IBISWorld, the nation’s largest publisher of industry research. Throughout the five years to 2016, commodities growth and heightened global efforts to discover new oil and gas reserves will stimulate sales of industry products. Also, the relatively weak dollar will underpin robust growth in exports. As a result, IBISWorld forecasts industry revenue will increase at an average annual rate of 4.9% to $24.9 billion in the five years to 2016, including 3.0% growth in 2012 alone.

According to IBISWorld analyst, Josh McBee, during the five years to 2011, the Mining, Oil and Gas Machinery Manufacturing industry has undergone a period of growth underpinned by booming global demand for mineral and energy commodities. “Rising resource prices have led the mining and oil industries to expand existing production and increase exploration, resulting in strong demand for machinery and equipment,” says McBee. “Following the financial crisis of late 2008, however, the faltering global economy, credit crisis and weaker commodity prices resulted in a sharp downturn in energy and mineral exploration and production. As a result, decreased demand for industry products caused revenue to fall 20.0% to total $19.3 billion in 2009.”

Steady growth from 2006 to 2008 offset more recent declines. IBISWorld estimates revenue in the Mining, Oil and Gas Machinery Manufacturing industry will increase at an average annual rate of 5.7% during the five years to 2011. Conditions are improving in 2011 due in part to the resilient Chinese economy, which is stimulating global mining activity. As a result, revenue is expected to increase 8.2% and total $19.6 billion in 2011 as global demand picks up. Lingering economic uncertainty and weak global drilling activity will continue to present issues, though, negatively impacting capital expenditure plans in oil and gas exploration and development.

After a relatively strong year in 2011, industry firms are expected to continue steady growth in 2012, with rising commodity prices encouraging customers in the mining, oil and gas sectors to resume spending on machinery and equipment. This trend is anticipated to continue through 2016 as a prolonged commodities bull market and heightened global efforts to discover new oil and gas reserves stimulate further sales of industry products. In addition, shale gas, which is a type of natural gas produced from sedimentary rock, will play a key role in the growth of the domestic energy industry as concerns about global warming escalate. Meanwhile, the relatively weak dollar will underpin robust growth in exports over the next five years. As a result of these factors, IBISWorld projects industry revenue will increase at an average annual rate of 4.9% to $24.9 billion through 2016.