Industrial Gases Market Analysis

Industrial Gases Market (Global, 2023)

Introduction

The industrial gases market plays a vital role in many different industries, such as manufacturing, health, and energy, and is a key component of processes ranging from metal forming to medical applications. In this context, the demand for oxygen, nitrogen, argon, and hydrogen continues to grow, with technological developments and the growing focus on sustainable energy solutions driving the demand. The market is characterized by a wide range of applications, with the leading companies innovating to meet the evolving needs of end users while at the same time navigating the regulatory and environmental framework. And the integration of digital technology and automation into the supply chain is reshaping how industrial gases are produced, distributed, and used, making agility in the face of a rapidly changing business environment all the more important. The ability to understand the interplay between supply and demand, and to anticipate the competitive situation and the emerging trends, is crucial to effective decision-making and strategic planning.

PESTLE Analysis

Political

In 2023, the industrial gases market will be influenced by various political factors, such as government regulations and trade policies. For example, the US government imposed a duty on the import of certain gases, which influenced the pricing policy of companies operating in this sector. The European Union, on the other hand, introduced a green deal, which requires industrial gas producers to comply with the green deal, which aims to reduce greenhouse gas emissions by at least 55% by 2030, compared to the level in 1990. This means that producers will have to invest heavily in clean technology. According to estimates, compliance with these regulations will cost the industry at least one hundred million dollars a year.

Economic

The market for technical gases in 2023 is characterized by the fluctuating energy prices and the varying rate of inflation. In the first quarter of 2023, the average price of natural gas, a major source of many technical gases, rose to about $ 6.5 per million Btu from $ 4.5 in 2021. This increase squeezed the profit margins of gas producers. In addition, the global rate of inflation is expected to be 5.2% in 2023, which will affect the operating costs and the purchasing power of consumers, thereby affecting the demand for technical gases in various industries, including industry and medicine.

Social

The social trends are increasingly influencing the industrial gases market, particularly in terms of safety and health. A study conducted in 2023 shows that 72% of consumers are willing to pay more for products produced in an environment-friendly manner. Companies are responding to the changes in consumers’ behavior by investing in greener production processes such as hydrogen production. The share of hydrogen production among industrial gas producers is expected to increase by 30% by 2025. In addition, the ongoing focus on safety has increased the cost of compliance and safety training. On average, companies spend $ 1,200 per employee on safety training.

Technological

In the field of industrial gases, technological progress plays a crucial role, especially in the development of more efficient production methods. In 2023, the use of advanced separation techniques such as membrane separation and cryogenic distillation increased by a quarter over the previous year. These not only increase the efficiency of production, but also reduce energy consumption by up to 15 percent. In addition, the use of digital technology such as the Internet of Things and artificial intelligence is expected to further increase the efficiency of the industry. On average, companies are investing more than half a million dollars a year in digital transformation.

Legal

The industrial gas market is a highly regulated market, and the regulatory framework is becoming increasingly complex. New regulations are being introduced to ensure greater safety and the environment. In 2023, the OSHA standard will be revised, which will require companies to meet stricter safety requirements, which will result in an average cost of compliance of $ 250,000 per facility. Also, the implementation of the REACH regulation in the European Union requires companies to register chemicals, including industrial gases, which will cost up to € 150,000 per substance.

Environmental

In the field of industrial gases, especially in the light of climate change initiatives, considerations of the environment are of the utmost importance. In 2023, more than 60 countries will have joined the global carbon trading system, and the average price of a ton of carbon dioxide will be about $30. This will make it profitable for gas companies to invest in carbon capture and storage (CCS) technology, with the value of the expected investment estimated at $2 billion. In addition, the push for a sustainable economy will lead to an increase of 40% in the production of low-carbon hydrogen, which is expected to constitute 10 percent of the total hydrogen production by 2025.

Porter's Five Forces

Threat of New Entrants

The industrial gases market has a medium degree of protection against competition, including significant capital investment, regulatory compliance and specialised technology. In addition, the market is dominated by a few large companies with strong brands and distribution networks. New entrants can enter the market, but it is moderately difficult to take a significant share.

Bargaining Power of Suppliers

Supplier power is relatively low in the industrial gases market because of the large number of suppliers and the commoditized nature of many gases. This makes it relatively easy for companies to change suppliers without incurring large costs, which limits suppliers’ ability to set prices and conditions.

Bargaining Power of Buyers

The buyers in the industrial gases market are in a strong position, especially the big industrial customers who buy in bulk. They can bargain over prices and demand improved service. That puts pressure on suppliers to stay competitive and respond to their customers’ needs.

Threat of Substitutes

In spite of the fact that there are alternatives to industrial gases in the form of other energy sources and other chemical processes, the special properties and the high efficiency of industrial gases limit the dangers. However, if the development of technology should result in more suitable alternatives, the dangers would remain at a medium level.

Competitive Rivalry

The competition is intense in the industrial gases sector, with many competitors vying for market share. Competition is based on price, service quality and technological development. The companies are forced to compete against each other in terms of innovation and marketing to differentiate themselves in the crowded marketplace.

SWOT Analysis

Strengths

• Diverse applications across various industries including healthcare, manufacturing, and energy.
• Strong demand driven by the growth of end-user industries.
• Technological advancements leading to improved production efficiency and safety.
• Established supply chains and distribution networks enhancing market reach.

Weaknesses

• High capital investment required for production and infrastructure.
• Environmental regulations and compliance costs impacting operations.
• Market volatility due to fluctuating raw material prices.
• Limited awareness and understanding of industrial gases among smaller businesses.

Opportunities

• Growing demand for clean energy solutions and sustainable practices.
• Expansion into emerging markets with increasing industrialization.
• Innovation in gas applications, such as in food preservation and pharmaceuticals.
• Strategic partnerships and collaborations to enhance product offerings.

Threats

• Intense competition leading to price wars and reduced profit margins.
• Economic downturns affecting industrial production and demand.
• Potential regulatory changes impacting production processes.
• Supply chain disruptions due to geopolitical tensions or natural disasters.

Summary

Industrial gases in 2023 are characterized by high demand and diversified applications, backed by technological developments and established supply chains. High capital costs and regulatory constraints are two major challenges. Opportunities lie in a greater focus on sustainable development and the expansion into emerging markets. Threats are the intense competition and the emergence of alternative economies. The best way forward for companies is to make the most of their strengths and explore new avenues.