Last months edition of gasworld (issue 17) provided a detailed breakdown of the Chinese industrial gases market, which was valued at $1.7 Bn in 2005 and is forecast to grow at 18 per cent per annum over the next five years. There is no doubt that electronics, steel and chemicals are driving demand for gases in China but what is happening in the three other major countries that make up the region?
Japan “ changing supply structure
For over a decade, the industrial gases business in Japan has been relatively stagnant, reflecting the low growth of the economy. The country has some 350 gas companies and over 1700 gas distributors. There were some international major players present such as Air Liquide and BOC but others like Air Products, Praxair and Linde had only established technology and specialised relationships with gas companies operating in the market and never a significant presence in the largest market outside of the United States.
A complex supply structure exists right across the supply channel in Japan. Large gas end-users such as Nippon Steel and Mitsubishi actively participate in joint ventures with gas companies to build air separation plants to supply their needs. Alongside this there is a multi-layered structure for distributing cylinders through over 1700 distributors, some of which are have a turnover less than $1 million.
The profitability of companies operating in this market was very much lower than other regions in the world. Major international companies such as Air Liquide and BOC experienced this. Over the past three to four years there have been some significant changes in the supply structure in Japan. Companies have looked at re-structuring, merging and acquiring in order to improve profitability and to achieve some revenue growth in a relatively dormant economy.
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