Centrifugal Compressor Market Set to Reach USD 5.7 Billion by 2034, Driven by Steady Industrial Demand

The Centrifugal Compressor Market highlights steady growth driven by rising industrial demand, energy efficiency needs, and expanding applications across oil & gas, power generation, chemical processing, and HVAC systems. The global market, valued at USD 3.5 Bn in 2023, is projected to reach USD 5.7 Bn by 2034, reflecting a CAGR of 4.6% from 2024 to 2034. This growth is supported by increasing adoption of advanced compression technologies, modernization of industrial infrastructure, and the push for cleaner, more reliable mechanical systems. As industries continue to prioritize operational efficiency and reduced emissions, centrifugal compressors are expected to remain essential components in large-scale processing and energy operations worldwide.

The major factors driving the growth of the global industry is the growth of the oil and gas industry, metal and mining industry, and power industry. The demand for centrifugal compressor market in the oil & gas industry is majorly due to their exhaustive applications in high-pressure air, air separation, and fuel gas boosting. Centrifugal compressor industry trends include growing demand for natural gas, rising investments in petrochemical projects, and increasing focus on energy efficiency.

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Global centrifugal compressor market is expected to grow over the forecast period due to the revival of stalled infrastructure projects, the demand for eco-friendly products, and technological innovations in centrifugal compressor technology. Manufacturers of centrifugal compressors in the industry are allocating a major portion of their revenue to R&D to differentiate them from the competition perspective.

Market Segmentation

By Service Type

The market is increasingly service-oriented as operators seek to extend the lifecycle of high-value assets.

New Equipment Sales: Dominated by large-scale capital projects (greenfield refineries, LNG terminals).

Aftermarket & Maintenance: The fastest-growing segment. This includes routine servicing, spare parts replacement, and remote monitoring subscriptions.

Overhaul & Retrofit: A critical segment for aging infrastructure in Europe and North America, where older compressors are being retrofitted for higher efficiency or to handle new gas mixes (e.g., hydrogen blending).

By Sourcing Type

Original Equipment Manufacturer (OEM): OEMs (e.g., Siemens Energy, Baker Hughes) retain the majority share, especially for critical, high-pressure applications where warranty and proprietary technology are paramount.

Aftermarket (Third-Party/Distributors): Gaining traction for non-critical components and standard maintenance, driven by cost-competitiveness and faster lead times.

By Application

Process Gas Compression: The largest revenue generator, critical for chemical reactions and refining.

Natural Gas Transport: High demand due to expanding pipeline networks and LNG value chains.

Air Separation: Vital for producing industrial gases (nitrogen, oxygen) for medical and manufacturing use.

Clean Energy (New): Rapidly expanding segment covering Hydrogen Compression and CCUS, where compressors must handle high pressures and supercritical CO2.

By Industry Vertical

Oil & Gas: Remains the dominant vertical (approx. 40% share) due to upstream extraction and downstream refining needs.

Power Generation: Driven by gas-fired power plants and the integration of turbines.

Chemicals & Petrochemicals: Steady growth fueled by demand for plastics, fertilizers, and synthetic materials.

Food & Beverage / Pharmaceuticals: Niche but high-value segment requiring Oil-Free centrifugal compressors to ensure product purity (Class 0 air).

By Region

Asia-Pacific (APAC): The fastest-growing region, led by China and India's massive industrial build-out and refining capacity additions.

North America: The largest mature market, driven by shale gas processing, LNG export terminals, and advanced technological retrofits.

Middle East & Africa: Significant growth due to mega-projects in Saudi Arabia and UAE aimed at diversifying energy exports.

Europe: Focus is almost entirely on efficiency upgrades, hydrogen pilot projects, and decarbonization compliance.

Regional Analysis

North America: In 2025, the U.S. continues to lead in technological adoption. The focus has shifted heavily toward updating existing infrastructure with digital twin capabilities to predict failures before they happen.

Asia-Pacific: Industrial hubs in China and Southeast Asia are driving volume. In 2024 alone, the region accounted for over 35% of global new unit orders, specifically for large-scale petrochemical complexes.

Market Drivers and Challenges

Drivers

LNG Infrastructure Boom: With natural gas serving as a "bridge fuel," massive investments in LNG liquefaction trains (which rely heavily on large centrifugal compressors) are a primary growth engine.

Decarbonization Mandates: Stricter emissions regulations are forcing industries to replace inefficient reciprocating units with high-efficiency centrifugal models, particularly those using magnetic bearings (MagLev) to reduce friction and energy loss.

Hydrogen Economy: The unique physics of hydrogen (low density) requires specialized, high-speed centrifugal compressors, creating a new, lucrative equipment category.

Challenges

High Capital Expenditure (CAPEX): Centrifugal compressors are expensive, complex assets. High interest rates in 2024/2025 have delayed some Final Investment Decisions (FIDs) for new plants.

Surge and Stall Issues: Technically, these compressors are sensitive to flow variations. Managing "surge" (flow reversal) requires complex control systems, adding to the cost and maintenance burden.

Raw Material Volatility: Fluctuating prices of steel, titanium, and specialized alloys impact manufacturing costs and delivery timelines.

Market Trends (2024-2025)

Magnetic Bearings: A move away from oil-lubricated bearings to active magnetic bearings (AMB) to eliminate oil systems, reduce maintenance, and lower environmental risk.

Digitalization & IIoT: Integration of platforms like GE Predix and Siemens' Xcelerator is now standard. Operators demand real-time vibration monitoring and predictive analytics to extend maintenance intervals.

Modular Design: Manufacturers are shifting toward "plug-and-play" skid-mounted designs that reduce on-site installation time by up to 30%.

Future Outlook

By 2034, the market will likely look vastly different. While Oil & Gas will still be a major player, the "Green Compressor" segment will be substantial. We anticipate:

Hybrid Compressors: Units designed to handle varying blends of natural gas and hydrogen as pipeline networks transition.

Service-as-a-Business: OEMs will increasingly sell "Compressed Air/Gas as a Service" rather than just the hardware, shifting CAPEX to OPEX for customers.

Key Market Study Points

Fastest Growing Segment: Hydrogen & CCUS applications.

Dominant Technology: Multi-stage centrifugal compressors (due to high pressure ratio requirements in energy sectors).

Key Metric: Efficiency improvements of 1-2% are now major selling points due to high energy costs.

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Competitive Landscape

The market is consolidated, with top players controlling a significant share of the high-spec market.

Major Players: Atlas Copco, Ingersoll Rand, Siemens Energy, Baker Hughes, Mitsubishi Heavy Industries (MHI), Elliott Group, MAN Energy Solutions.
Strategy: Market leaders are aggressively acquiring smaller firms specializing in AI/analytics and specialized gas handling (like CO2) to future-proof their portfolios.

Recent Developments (2024-2025)

Baker Hughes (Oct 2024): Secured a major contract with Saipem to provide Integrated Compressor Line (ICL) technology for the Kaminho FPSO project in Angola. These units use magnetic bearings and are hermetically sealed to eliminate emissions.

Danfoss (2025): Celebrated the 30th anniversary of its Turbocor® technology, launching a new range of high-capacity oil-free compressors optimized for low-GWP (Global Warming Potential) refrigerants, targeting the green HVAC market.
Siemens Energy (Late 2024): Announced the successful deployment of its IoT-enabled compressor fleet in a major European hydrogen pilot, achieving a 15% reduction in energy consumption through AI-driven operational adjustments.

M&A Activity: Industry giants have continued to consolidate, with several mid-sized acquisitions in 2025 focused on strengthening aftermarket service networks in the APAC region to support the growing install base.

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