Sharp contrasts are emerging between the sales of gaseous and liquid product in the Japanese market, The Gas Review (TGR) reports, as first quarter 2013 results in the region come under the microscope.

Compounding concerns over the operational ratios of ASUs in the country are fears for an argon market in surplus, with little sign of a recovery in demand for the added-value product.

Such trends come against a backdrop of something of an industrial rollercoaster in the country. While sectors such as iron and steel and the chemicals business have been seen to improve against last year, there have still been sluggish signs in areas such as manufacturing – including the automotive sector, metal processing and construction.

This despite both a correction in the value of the yen since early 2013 and a new administration’s plans to revive the economy. TGR explains, ‘Although there is a sense of some bright spots having arisen in the Japanese economy, it seems that this has by far yet to penetrate into the overall manufacturing industry in Japan, which encompasses the users of separated liquid gas.’

‘Compared to the first quarter of last year when sales of liquid gas were comparatively good, liquid oxygen, nitrogen and argon are all moving along down by some 4-5%.’

Trends

The iron and steel sector, the largest consumer of industrial gas in Japan, has been performing well since last year and onsite gas operations at these businesses have maintained a high operational ratio. Meanwhile, although there have been some differences among the various plants in the chemicals sector, the supply of nitrogen gas to this industry has been showing steady improvement in comparison to the same period in 2012.

These ‘core materials’ are steadily heading toward recovery, TGR notes, and it shows in the volume of gaseous product supplied.

In contrast, however, with the seeming lack of recovery in the manufacturing sector and the operational ratios of plants in this area not going up, the consumption of liquid oxygen, liquid nitrogen and liquid argon remains low.

Further fears are also surfacing about the argon market itself. In the air separation market, the fact that the demand for argon is not making a comeback is a source of concern.

As the gas of the highest value in the air separation process, the production and marketing of argon contributes to the profitability of the gas separation business; with an argon market in surplus and a feeling that operational ratios of the region’s plants must be lowered accordingly, the profitability of the liquid gas business is ‘only worsening’ as operating (electricity) costs rise, TGR explains.

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