The 17th gathering of IG China took place in Chengdu at the Century City New International Convention Centre last week, and gasworld was there to both support and report on the event.

The concern within the industrial gases community was the fact that growth was significantly slowing in what was one of the fastest growing markets in the world.

We have all seen the Chinese Government figures that GDP was slowing to below 7% this year. While the gases business has over the past 10 years been witnessing between 15-20% growth, there is strong evidence that the gases business is slowing from those highs.

This was reflected in discussions with a number of equipment suppliers that were exhibiting at the IG China 2015 exhibition. However, most economies around the world would love to have a GDP growth of around 7% per annum – so why the doom and gloom?

One major cylinder manufacturer had seen revenues halve in 2014 and the general consensus out there was that gas companies and distributors were cutting their orders last year and even this year. While there was a relatively good representation of equipment manufacturers with stands at the exhibition, what was clear that there were a lack of visitors to those stands.

According to AIT Events, the show’s organiser, day one saw 2,500 registrants to the exhibition, which was in fact a shared exhibition between IG China and NGV EXPO China 2015. gasworld observed a lot of interest in the natural gas part of the exhibition, but industrial gas representation was certainly smaller than in previous years.

It does very much look like LNG and CNG are the hot topics these days, and where the focus of cryogenic and compressed gas equipment manufacturers are. Due to the shared technologies, that has been good for the equipment suppliers to the gases industry and helps to offset any areas of decline in the gases business itself.

Exhibitors

What was good to see was the maintained presence of international companies such as Cryogenic Industries (ACD, Cryoquip), Cryostar, Rotarex, Generant, Taylor-Wharton, Bestobell, RegO, Lydall, Orange Research, Swagelok, and even Cryogenmash from Russia. However, others were notable by their absence and reflected the concerns expressed for the current demand for equipment in China.

One company exhibiting for the first time was Ability Engineering from the US, manufacturer of vacuum insulated pipe and cryogenic purification equipment. The company was pleased with the general number of enquiries, even if visitors were steady and not abundant.

A variety of visitors from around the world were evident, ranging from the Middle East, Asia, Australia, the US, the CIS and Europe.

IG China 2015 CIMC Enric

Several companies did ask, where were the major gas companies for such event? It was noticeable that there was a poor presence of the Tier 1/2 gas companies to what has become the largest exhibition in the world for the industry.

Several Chinese equipment manufacturers approached gasworld; arguably reflecting a reflection to the slowing domestic market and a desire to explore international markets for growth.

 

CIGIA

gasworld had the pleasure to interview the current President of the Chinese Industrial Gases Association (CIGIA), Mr Du Jun.

Du is the Factory General Manager of Beijing Oxygen, one of the original founders – in the 1980s – of what would later become CIGIA. Beijing Oxygen was also the first joint venture (JV) that Praxair formed upon entry into the Chinese market.

He explained that CIGIA had over 800 members across China, that regional or provincial gas associations – while retaining their independence – are also part of that membership, and that the organisation continues to liaise with the Chinese Government on behalf of its members. CIGIA reports into the Ministry of Civil Affairs via the Petroleum & Oil Association.

CIGIA has two meetings per year and has formed eight technical working group committees to monitor and administer various sectors within the industrial gases business – including carbon dioxide (CO2), LNG, hydrogen (H2), welding gases, and medical gases. The committee is comprised of no less than 40 executives.

Du described his role being made of three main functions; serving both government and CIGIA members, and providing the bridge between the two. He also wants to drive more interaction between CIGIA and other associations, while noting that his third important role is to evolve CIGIA into a more general gases association and is changing its name to CGA – the Chinese Gases Association. The aim here being to embrace LNG, CNG and LPG.

Du recognises the presence of the Asian Industrial Gases Association (AIGA) and that mentioned that there had been increasing interaction between the two associations in the past two years. Frank Xu, Director of AIT Events, also stated that with the cooperation of CIGIA, IG China will make Shanghai its base in future – and that Chengdu will be the base for the NG Events. Xu informed gasworld that the next IG China (2016) will be in 23rd – 26th August, and will take place at the International Convention Centre in Pudong, Shanghai Province.

Cool winds blowing through China?

So, are there chilly winds blowing through our industry? Well, the answer has to be yes as project activity reduces and significant sectors such as steel production declines. However, there are opportunities as well.

I was privileged to be asked to be a speaker at the Gases Forum during the event and I expressed the need for significant restructuring to take place in the packaged gas supply sector; mainly to bring in standard operational practices that meet current safety legislation. Another opportunity is to consolidate the market through M&A activity – this is taking place within China, for sure.

However, there is evidence that the better and larger packaged gas operators are actually moving into the special gases space – providing more competition to major Tier 1 gas companies. Readers should keep an eye on both the gases market in China but also on Chinese companies looking to break out into the international market. What this space…