Argon joins oxygen and nitrogen as a product of the air separation process.
Unlike these gases, argon is in much smaller concentrations in the air, meaning that for every ton of nitrogen or oxygen produced in the air separation process, a much smaller quantity of argon is extracted.
This co-dependent relationship between the three gases means that if there is reduced demand for oxygen or nitrogen, less argon will also be produced, making the gas’ supply and demand trends unpredictable; historically, supply of the gas has been tight.
Before the financial crisis hit, demand for argon had been growing rapidly, and with a lack of new capacity, the market was very tight, making the price of the gas rise.
The global financial crisis caused significant downturns in huge industries, like steel for example.
These industries are large on-site and pipeline consumers of industrial gases, predominantly oxygen and nitrogen, meaning production at ASUs slowed and even less argon was being produced.
On the flip side however, the two main consumers of argon - the steel industry and the metal fabrication industry - both experienced serious downturns as a result of the global financial crisis, meaning that theoretically, a cut in argon production as a result of decreased demand for oxygen and nitrogen should have balanced things out.
When gasworld spoke to Praxair about recent trends in the argon market, the company commented, “Argon demand has generally declined in 2009 as a result of the global recession, however, we are seeing volume turnaround in 2010.”
“Natural argon product supply was reduced; however, we are well-positioned to produce argon from our installed base of ASUs to meet market needs as customer demand returns and expands.”
Recovery and growth
An exception to the decline in the argon market is China, where demand has continued to grow. Brazil too has experienced the fastest growth on a regional basis, over the past few years.
“Two factors driving strong growth in argon demand in Brazil and China are continuing infrastructure investments and the growth in sales for autos and appliances,” explained Praxair.
“China and India are probably best positioned to demonstrate the highest growth rates going forward, as the intensity of argon usage increases in welding and stainless steel production.”
Praxair confirmed that it does anticipate a rebounding in demand in the US and Europe, two regions badly hit by recession.
By looking at argon use in these regions the potential for growth in India for example can be clearly seen. In India, approximately 20% of welding is completed with shielding gases, whereas this figure is 80% in the US and Western Europe.
Similarly, approximately 70% of stainless steel production in India is 200 series, which uses only small amounts of argon per ton of stainless steel. In the USA, 200 series is estimated at less than 5% of total production.
It’s a waiting game to see whether demand for argon will level with the amount being produced as a result of a cut in production at ASUs around the globe. With a rebounding in demand on the horizon for the US and Europe alone, argon prices may once again rise.