Global Market Outlook On Industrial Gas

  • The global industrial gas market is estimated to be around $76 billion in 2017, which is expected to grow at a CAGR of 7 to 8 percent until 2022
  • The market is currently witnessing an acceleration in growth, due to positive growth in global economies. Also, the profit margins have witnessed a rise, due to low operating cost arising out of cheaper energy prices

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Supplier Scenario

  • Global industrial gas market is dominated by a few number of players with the top five players contributing around 80 percent of the market share. Top players are looking to strengthen their market position through mergers and acquisitions
  • Linde and Praxair merger is likely to take place based on the current events. This will create the largest industrial gas player and change the market share position in many of the regions

Global Market Size - Industrial Gas 

  • The industrial gas market is witnessing high growth, due to the revival of large economies, like China and the US. However, the profit margins have witnessed a rise due to lower operating cost arising out of cheaper energy prices
  • The global industrial gas market was estimated to be approx. $76 billion in 2017, which is expected to grow at a CAGR of 7 to 8 percent for 2022.The major drivers for growth would be emerging economies including China and India
  • North America, North Pacific rim (China, Japan, etc.), and Western Europe are the biggest markets contributing more than 75 percent of global market
  • Revival in economic activity and stabilizing oil and natural gas prices drive the industrial gas market growth

Global Demand by Application 

  • The overall growth outlook for the end-user industries in the mid-term future is moderate. Healthcare, electronics, etc., are major growth drivers whereas oil and gas, steel sector tend to be flat

Key Trends

  • Manufacturing sector is witnessing flat growth resulting in lower sales volume for larger players in Americas and Europe
  • Steel sector is going through a sluggish phase affecting the oxygen gas demand
  • Regulations for cleaner energy fuel and innovations in renewable space are driving the demand for hydrogen and on-site hydrogen market
  • Increased use of digital devices and the growth of semiconductor industry has made electronics market a leading consumer of industrial & specialty gas
  • Healthcare needs and aging population have driven the demand for pure and complex gases. Companies like Air Liquide has invested heavily in medical-grade gas research
  • Food and beverage sector performed relatively better than majority of the other industries in 2015 offsetting lower sales volume in South America among other regions

Global Market by Delivery Mode 

  • Onsite segment contributes to the largest delivery segment, serving large industries
  • Praxair witnessed its merchant gas revenue share going back to the 2015 levels of 34 percent in 2017 from 35 percent in 2016
  • Linde improved its share of onsite business in 2017 from 2016 with new plants coming online in Germany, Northern Europe, the Middle East and Eastern Europe
  • Air Liquide supplies its bulk and cylinder gases around its onsite or pipeline businesses

Cost Structure

  • High electricity requirement in separation of industrial gases makes it a primary cost factor and accounts for 45 – 55 percent of the overall production cost
  • Electricity cost accounts for around 60 percent of the cost of generation and hence cost of production fluctuates with electricity prices. The weightage of cost factors could vary based on price change of individual parameters in each country
  • Recovery in crude oil price is likely to exert upward pressure on distribution cost. Electricity price is also expected to increase moderately, resulting in surge in production cost
  • Large scale operation provides lower production cost per unit of gas as compared to small independent ASUs for producing industrial gases separately
  • High capital costs associated with ASUs requires large industrial consumers to opt for long term gas purchase contracts (3 years for bulk liquid and 15 years for tonnage)