Market study in process plant design

Market study is the crucial part of the literature survey as it later determines the proper size of the plant and the selling price of the product. It contains present demand and supply, pricing and distribution and projected demand. The later could be made based on the past and current price trends. Also, it can be estimated from expected future scenarios (e.g economic growth, growth or decline of a sector etc).  If figures are available, the average growth percent or the expected growth rate could be used. The estimate should be conservative. Always present a table showing the 3-5 years of annual production or import of the product.

Contents of Market study

1. Present demand and supply
2. Projected demand
3. Pricing and distribution
4. Production program

Example

Gypsum powder production plant

The present demand is derived using the available data on consumption of gypsum powered.

Table 1: Demand for Gypsum Powder

Year	Demand for Gypsum Powder (ton)
2002	66000
2003	68998
2004	56987
2005	701995
2006	74,545
2007	78,272

The consumption of gypsum powder is set at 82, 186 tons, in the year 2008. 

Projected Demand

Assuming a 7% annual increment in demand for gypsum powder, a 10 ten demand projection is made as shown in Table

Year	Quantity (ton)
2009	87,939
2010	94,094
2011	100,681
2012	107,729
2013	115,270
2014	123,338
2015	131,972
2016	141,210
2017	151,095
2018	161,671
2019	172,988
2020	185,098

  

Pricing and Distribution

Currently, a kg of gypsum powers sales about $1500/ton. Allotting attractive margin for the distributors, the factory selling price is set at $ 1000/ton.

Plant Capacity

The envisaged plant produces 50000 tons of gypsum powder per year. The amount can be doubled or even triples without additional machinery by increasing the number of shifts, if this warrants the market demand.

Production Program

The program is scheduled based on the consideration that the envisaged plant will work 275 days in a year in 1 shift, where the remaining days will be holidays and for maintenance. During the first year of operation the plant will operate at 70 percent capacity and then it grows to 80 and 90 percent in the 2^nd and 3^rd years, respectively. The capacity will grow to 100 percent starting from the 4^rd year. This consideration is developed based on the assumption that market and logistics barriers would take place for the first two years of operation. 

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