Market Trends of Asia-Pacific Industrial Gases Industry
Chemical Processing and Refining to Dominate the Market
- Industrial gases, such as oxygen, nitrogen, carbon dioxide, hydrogen, methane, and propane, are essential molecules required as reaction agents for various process steps in the chemical production chain.
- Industrial gases provide solutions for inerting, reactor cooling, and pH control. Petrochemicals are substances obtained from the refining and processing of petroleum and natural gases. They require inert atmospheres for transportation and storage, which is provided by nitrogen.
- In refineries, oxygen is used to enrich the air feed to catalytic cracking regenerators, increasing the units' capacity. It is used in sulfur recovery units to achieve similar benefits. Oxygen is also used to regenerate catalysts. Thus, industrial gases are of utmost importance for chemical processing and refining.
- Asia-Pacific has grown to be the hub for chemical processing globally. The chemical industry in China, India, and Japan has been growing rapidly. The largest proportion of the global chemicals market is held by Asia by far. Since 2012, it has continuously accounted for more than half of the global chemicals market.
- Chemical production in Asia overall increased by 4.2% in 2022. India saw a significant increase in production (+4.6%).
- China is not only the largest chemical market but also one of the fastest growing. European Chemical Industry Council (CEFIC) predicts that by 2030, China's share of global chemical sales is likely to rise to about 49%, up from 41% in 2022.
- China is a hub for chemical processing, accounting for a major chunk of the chemicals produced globally. The country contributes to more than 35% of global chemical sales. Many major global companies have their chemical plants in China.
- India is already a refining hub with 21 refineries, with expansion planned to attract foreign investment in export-oriented infrastructure such as product pipelines and export terminals. India's crude oil production in 2022 was 29.7 MMT (million metric tonnes). Refining capacity has increased significantly recently due to the expansion of several refinery projects.
- Therefore, the downstream sector is expected to grow during the forecast period. Additionally, India is the fourth largest importer of liquefied natural gas (LNG). India consumed 204.23 MMT of petroleum products and 63.9 BCM of natural gas in 2022, showing growth of 5.1% and 5% compared to 2021.
- The strong growth momentum in Asia's chemical and refining industries is expected to drive the demand for industrial gases in the region.
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China to Dominate the Regional Market
- China has been one major country in the consumption and production of industrial gases. The country has witnessed various investments in the industrial gas segment.
- In 2023, China unlocked a high-yield industrial gas flow with commercial value in the Cambrian shale, dating back to 540 million years. The global first development holds strategic significance in promoting regional economic and social development and ensuring China's long-term energy security.
- With this latest breakthrough, it is expected that a second shale gas field of trillion-cubic-meter reserves and 10-billion-cubic meter production could be built in China, providing a high-quality clean energy supply to promote Chinese modernization. Considering industrial gas use in this sector, the market can benefit significantly.
- In March 2023, Air Liquide, a major industrial gas player, announced investing around EUR 60 million (USD 65.29 million) to revamp two Air Separation Units (ASUs), which the group operates in the Tianjin industrial basin in China. This announcement comes within the context of the renewal of a long-term industrial gas supply contract with Tianjin Bohua Yongli Chemical Industry Co. Ltd, a subsidiary of Bohua Group.
- As part of this modernization plan, Air Liquide will significantly reduce the carbon dioxide emissions linked to producing oxygen and other gases by adapting these ASUs to run on electrical power instead of steam. Additionally, the group has signed a three-party Memorandum of Understanding with YLC and the Tianjin Binhai District to explore the implementation of Carbon Capture, Use, and Storage (CCUS) solutions.
- Apart from these projects, the demand for industrial gas through various end-user industries is also significant. These gases find applications in multiple industries, such as oil and gas, automotive, metallurgy, and chemical processing.
- In 2022, the Tarim oil and gas production registered a 4% increase over 2021, producing 33.1 MMT (million metric tonnes). According to official plans, the Tarim oil field is expected to produce 40 million tons of oil and gas annually by 2025 and 50 million tons by 2035.
- According to preliminary data from the National Bureau of Statistics of China, power generation in the country increased in 2022, reaching 8,400 TWh (+2.2% compared to 2021). Electricity consumption in 2022 also increased, reaching 8,637 TWh (+3.6% over 2021). Furthermore, in 2022, domestic electricity consumption by urban and rural residents increased by 13.8%.
- China is also the world's biggest automobile market in production and sales. According to OICA (The Organization Internationale des Constructeurs d'Automobiles), vehicle production in China reached a total of 27.02 million units in 2022, which is an increase of 3% over 2021 for the same period.
- In China, the chemical production grew by 5.9% in 2022. The opening up of the Chinese economy is expected to boost domestic demand growth in China, especially in the consumer goods and health and nutrition sectors, and contribute to positive change in the market studied.
- All these end-user industry trends are expected to drive the demand for industrial gases in China.
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