There’s a distinct overlap between our cover theme this month and our regional focus, the North Pacific Rim. It’s almost impossible to discuss the gas markets of the North Pacific, and Taiwan in particular, without some spotlight on the electronics business; such is the symbiotic relationship between the two.
Electronics is big business in the region, even if this is ultimately for export gain in many cases.
As explained in our special features this month, the rise of tablet computers, smartphones and other devices, as well as continued steady demand for personal computers (PCs), is driving electronics growth. The surge in popularity of tablets is of special interest, it is thought.
At the heart of a large degree of this electronics boom is the North Pacific region, a renowned hub of electronics and semiconductor manufacture. What does this mean for the gases business in the area?
According to The Gas Review (TGR) via the summer 2011 edition of its Gas Review Nippon publication, gas for the photovoltaic (PV) sector is growing by around 10% per year. Nitrogen, hydrogen and argon are expected to experience such demand, while silane, high purity ammonia, and nitrogen trifluoride are thought likely to see a pronounced upward curve in demand.
Based on that, perhaps we could expect to see even more uptake of onsite fluorine too; The Linde Group has already spoken of the growing uptake for its onsite fluorine this year.
With such vigorous consumption of gases in mind, an interesting if not predictable trend is being observed in the North Pacific, and Taiwan in particular, concerning the supply of gas and the requirements of the major users.
It’s thought that the need for a stable supply of gas(es) is driving calls for more local production/supply, which may therefore open up opportunities for gas companies in the region to invest in more local gas equipment production facilities.
This might seem like a more viable opportunity or proposal if the boom in electronics appears to be a sustained trend, as current forecasts and conjecture would appear to suggest (www.gasworld.com/5909).
It hasn’t been all plain-sailing in the region, however. It’s been a mixed time for the North Pacific, viewed from either an electronics perspective or economically.
This summer, for example, it was reported that Japanese gaming giant Nintendo had posted weak sales of its new 3DS handheld gaming system and expected to see profits for the year to March 2012 fall below previous forecasts. Fellow Japanese electronics maker Sony also reportedly posted losses in the April to June quarter this year, as a result of production at its factories being hit by March’s earthquake and tsunami. Panasonic was thought to have suffered some effects of the devastating natural disasters too.
From a broader perspective, Japan’s retail sales are reported to have risen for the first time since the earthquake in March, indicating that the economy is beginning to recover. Confidence has grown since those natural disasters, but we’ll look at Japan in more depth next month when TGR’s Izumi Ohe provides our Japan analysis.
For the East Asian countries collectively, growth can also bring with it other concerns. While Japan, and other economies, may have seen confidence grow and sales rise, it’s thought that rising consumer prices have in fact hurt growth in the emerging East Asian economies.
The region may be home to some of the world’s fastest growing economies, China included, but this expansion brings increased domestic demand and in turn, pressure on inflation rates. Further still, higher commodity prices such as food and fuel costs are believed to have pushed up the consumer prices in the region. An additional product of this could well be a rise in interest rates, in an attempt to curb price growth.
For many of the economies in Asia/North Pacific, it may well be a case of looking at external factors to gauge growth in the future. There’s no escaping the Eurozone debt crisis and fears of a double-dip [recession], while a solution to raising the US debt ceiling has also been in the headlines recently. Both of these situations are likely to have been watched closely in the North Pacific/Asia region because export to the West is such big business.
When it comes to industrial gas in the North Pacific, it’s a largely promising outlook. The region, when including both Japan and China, represented 22% of the global gases market in 2010 and accounted for revenues of approximately $14.5bn.
This actually denoted a growth of 14% over 2009 revenues. If we break down those 2010 numbers, we can see that just over $7.4bn of revenues are attributed to Japan, while the ever-growing China market accounted for almost $5bn in revenues.
Taiwan and South Korea have broken through the billion-dollar barrier, with revenues of $1.06bn and $1.2bn respectively. In South Korea, that figure actually represents revenues growth of 25% over 2009, boosted by the captive conversion of a large HyCO unit by Air Liquide in late 2009.
Air Liquide appears to have strengthened its footing in Taiwan from an electronics perspective, with the news this year that it had secured long-term supply agreements with three industry leaders in the country. The news came as the company revealed it had signed 15 contracts with companies across the globe, with the new deals taking its supply to over 150 PV customers worldwide.
We’ve also seen investment in South Korea from The Linde Group, with the news that it is to open a new manufacturing facility to produce next generation onsite fluorine system equipment in Inju City, to meet increasing demand for onsite fluorine. Also in the Korea area, Air Products has completed start-up at its new electronics facility in Banwol, producing next generation materials for semiconductor manufacturers.
Clearly the Japanese economy is suffering due to the major of the earthquake and the lack of power in certain regions, though a retail rebound offers some signs of recovery.
Economically speaking, it is likely to be important for the region to combat inflationary pressures, with robust growth anticipated to only moderate slightly in the near future. A difficult external economic climate will be influential to the region and its export expectations, with the US and Europe in mind here.
In terms of gases and equipment, the outlook appears bright. It will be interesting to see what trends emerge as more local gas production and supply is required, if indeed that is the case in the long-term.
China continues to grow at a rapid pace, Japan’s gas market is firmly on the road to recovery following the damage caused by this year’s earthquake and tsunami, and interest in the electronics-led markets of Taiwan and Korea appears to be increasing – followed up with firm investments.