Focus on Japan


The midterm financial reports of the major Japanese industrial gas producers have now been released, and following along in the footsteps of the March closings, business has been strong in Japan and major gas producers have been achieving record profits.

There are several reasons for the increase in earnings, these include the recent strategy by Japanese producers to improve efficiency through reorganization, the continuing healthy growth in the US economy, the high demand from China (especially steel) and the internal Japanese demand for gases from such basic industries as steel, shipbuilding, machinery, chemicals as well as the strong position of electronics sector.

Major drivers for 2006 include the restructuring of the gas producers, especially in efficiency and cost reduction, resulted in stronger performance and capability to service the growing demand within Japan. Secondly, with a more robust Japanese economy, the gas producers were able to push through price increases in gases for the first time in many years, which were accepted across many end-user industries. Bulk gas prices have increased by an average 10-15 percent and this certainly reverses the weak market position in the past.

The major gas companies
There are three major Japanese gas companies, which supply a large distributor network – these are Taiyo Nippon Sanso, Air Water, and Japan Air Gases (the Air Liquide and former BOC jv). A fourth important gas company is Iwatani International. Sales of Taiyo Nippon Sanso Corporation (TNSC) and Air Water are at the Â¥400 billion (US$3.4 Bn) level, and the Japanese gas market has entered into an era of two Japanese owned giants which both hold the two prominent positions for the time being but in competition with the internationally owned JAG.

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