Caution is urged throughout the industrial gas industry, as the Gas Review notes a ‘dark cloud appeared over a segment of the demand for gas which until then, had been steadily growing’.
The magazine compiled an honest assessment of the state of the industrial gases industry for the second quarter of 2008, providing an analysis for gas demand from each business sector.
For the devices sector, the drop is thought to have continued, mainly used for semiconductor fabrication. Concern is apparently rising that as of October 2008, a full scale decrease in production by users in various areas would be underway and the sense of a coming slump would begin to take a more concrete shape.
Mixed fortunes had been experienced for individual industries during the July-September period, with production of crude steel increasing by 1.7% in July and marking an increase for the 26th consecutive month. Total monthly production for the period April to July showed an increase of 3.4%, though pig iron slumped 0.9% in July.
Consumption of oxygen is believed to have remained firm as a result, while unit consumption of oxygen had even shown a rising trend.
For the petrochemical sector, a worsening effect in earnings and profit due to the soaring price of oil was evident. To cope with this, readjustment of production (including a reduction) has been implemented.
Ethylene production dropped by 3.1% in July according to the Gas Review, with both oxygen and nitrogen for piping falling from a flat trend to a slight decrease as a result.
No indication of a drop was sensed in the production of four-wheeled vehicles from January to July, with industrial gas demand maintaining a high level. A drop in production since August has already started to take effect on the demand for gas however.
Even worse for the automotive industry, a 30% slump in the production of two-wheeled vehicles was felt from January to July, with gas demand falling greatly.
In the traditionally blossoming electronics sector, demand for gases such as argon, nitrogen and specialty gases has generally remained at a high level, in line with continued growth in silicon wafers, semiconductors, and LCDs. Indeed, with the production of LCDs progressing so well, an increase in consumption of gases such as nitrogen, silane, and nitrogen trifluoride (NF3) has been noted.
Optical fibre for use in communications was down in terms of production though, with a 15% decline for July harming demand for hydrogen and helium.
The demand for gases in cylinders, which is seen as an advance indicator for the gas market, is now sharply declining, suggests the analysis.
Acetylene, oxygen and carbon dioxide have ‘clearly dropped’ with the slump seen in construction, due to government control and reduced public spending.
Furthermore, cryogenic containers, storage tanks and seamless containers continued to show a decline in both production and orders received.
Overall the report suggests, rising prices for raw materials and energy are likely to cause the industrial gas business to tackle further price corrections to maintain its healthy position.