By Kari Williamson

The report, World Arc Welding Equipment and Filler Metals Market, shows that after the Asia Pacific, the EMEA region has been the second biggest contributor to the revival of the world arc welding equipment and filler metals market, with Eastern Europe and Middle East being the most important markets in the area.

The energy industry contributed the most to market growth in 2010, as it was the least affected by the downturn. This was due to the continuous demand for filler metals, as end-users preferred to invest in these lower-priced products during the slowdown.

In addition, this industry has considerable infrastructure requirements as well as repairs and maintenance in pipelines, offshore, liquefied natural gas (LNG) tanks, wind turbine installations and the nuclear sector.

There is also substantial demand from automotive and transportation, construction and infrastructure, industrial expansion in emerging economies and the expected hike in steel consumption in machinery and equipment.

Foreign direct investments (FDI) as well as a rise in emerging technologies – such as energy-saving machines and corrosion-resistant filler metals that save costs – have given a boost to the sales of arc welding equipment and filler metals in these sectors.

“While the Asia Pacific market is likely to benefit the most from the growth in these end-user industries, the EMEA will also experience significant demand from industries in Eastern Europe, Russia, Middle East and Africa,” says Frost & Sullivan Research Analyst Ruth Shilpa Sudhakar. “Manufacturers are looking to shift base to these economies to reduce their operational and labour costs and increase productivity.”

Lower demand in mature markets

Mature economies such as Central and Western Europe and North America are expected to witness lower demand, as they are still shaking off the effects of the downturn. Asia is likely to witness the entry of more participants, particularly in the filler metals market.

The rising base material costs are compelling manufacturers to raise the prices of their products, although customers are seeking more advanced technology, quality and services, at lower prices. A large number of smaller participants from China are able to match this requirement for a wide product range at affordable prices, while the influx of participants from Korea has also helped ease the demand for arc welding equipment and filler metals.

Investing in R&D

This profusion of companies is fragmenting the market and forcing manufacturers to invest in R&D to develop products that customers require and expand their product portfolio in a bid to retain their market shares. Manufacturers will be under pressure to offer the latest technologies, experimenting with novel base materials to slash the total cost of production and maintenance.

“Manufacturers are increasingly using high-performance alloys in filler metals market to avoid spatter and corrosion, which are useful advantages in the offshore segment,” notes Ruth. “A rising number of arc welding equipment is now portable, light weight, easy-to-use and energy-efficient or battery operated, and this lessens the pricing pressure on customers.”

Most manufacturers have introduced training programs for distributors and customers to enable the most efficient use of the products. They are also looking to strengthen their ties with distribution networks in emerging economies. In Russia, on the other hand, there is a marked acquisition trend.