Industrial gas use
Industrial gases are mostly used in three ways in the bulk chemicals industry: as reactants; for inerting and cooling systems; and in cleaning, leak testing, and drying systems. The chemicals industry itself generates large quantities of gases, usually as reaction by-products. However, industrial gas companies believe that there is a trend towards outsourcing supply to specialist suppliers and are optimistic about growth prospects.
The value of this business to the large suppliers varies between companies. Whereas Air Products recorded 25% of sales from their tonnage gases division, Praxair’s business is more diverse: in 2006, only 11% of sales were attributed to the chemicals industry and these included sales to biotechnology, life sciences and pharmaceutical firms. For Messer, sales to chemical companies made up 18% of sales in 2006.
It’s certainly a growing business, particularly in the Middle East and Asia. For example, Linde saw a 9.5% growth in its tonnage gas division sales in the third quarter of 2007. However, according to Jon Warnke (former Strategic Marketing Director at BOC), there are questions for the industry about how long the growth will continue. He commented: “We’ve seen a pretty sustained period of growth for the chemicals industry, 5…6…7% up to 10 percent, in terms of the finished product. Normally, you would expect the cycle to have gone down by now but in fact it’s been driven by Asia in terms of product demand.” Projected Asian demand has led to continued investment, when theoretically a downturn in the chemicals business cycle would be expected. “What has kept things going is that the costs of large plants have escalated for a number of reasons, such as steel cost increases and skills shortages, and so some of these projects have been delayed. So the cycle has not gone down as people thought it would.”
Hydrogen
Hydrogen is a significant growth area for industrial gas suppliers. In the refining sector, new environmental regulations require cuts in the amount of sulphur in fuels. This, combined with the exploitation of heavier crude oil grades, has stimulated the need for hydrogen for desulfurizing. Almost two-thirds of the hydrogen sold by Air Liquide is used in producing sulfur-free fuels.
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