A new report by the Freedonia Group, entitled World Industrial Gases, has been criticised as misleading by leading industrial gas consultancy – Spiritus Consulting. According to the new report, the industrial gases business is forecast to increase by 6.9% p.a. through to 2011 to reach $36.8bn.
However, according to Spiritus, the industrial gases market in 2007 reached an estimated $58bn – well above that stated in the Freedonia report. “It is rare that I comment on other consultancies reports but I have made an exception on this as I believe the report is far from accurate” states John Raquet, Managing Director of Spiritus. “While I have not read the report in full, the press release clearly indicates the findings of the report and you only have to add the gas turnover of the 6 leading quoted gas companies to see that the figures appear to be rather misleading”.
Our current forecast, which was based on a 2006 base year figure of $54bn shows that we expect the gases business to grow at over 8% per annum over the next 5 years to reach $80bn by 2011 – double that quoted by Freedonia.
The two largest regional markets are those of North America and Western Europe which account for over 60% of the worldwide gases business. While the Asia/Pacific region is growing fast and also contains the second largest market for gases – Japan – Spiritus states that the region only accounts for 25% of the total demand for gases and services.
“The problem I see is there is a misleading definition for what the gases industry is all about” says Raquet. “The industrial gas community and financial analysts understand that the total market size is defined as the supply of gases and services to end-users and excludes all those companies that operate their own plants for their own consumption. It is possible that the Freedonia Group is talking about the captive market for gases which does include those plants that are owned and operated by the end-users. However, you have to be careful on the value you place on the captive volumes and if this market was taken into account the size of the market would increase by a further $10-15 billion than that stated above”.
“China is exhibiting high growth and now equals that of Germany as the third largest market. There is still some way before it reaches that of Japan” comments Raquet. “Unfortunately we also disagree with the main drivers to growth in the future – we see the chemicals sector (including refining) as one of the main growth drivers for our industry over the next 5 years. Metallurgy, especially steel will be an important driver as well but let us not forget the electronics sector which continues to demand higher volumes and more specialised gases year after year.”
Spiritus will be presenting their latest global view of the industrial gases business at gasworld’s African conference to be held in Johannesburg next month (10/11th June).