As demand for steel dwindles, smaller volumes of neon and krypton are being produced.
The global plunge in demand for steel and the decrease in production by blast furnace producers in Russia and the US has resulted in a reduced supply of neon and krypton.
Hit by the pressure of the price hikes implemented by the overseas gas producers from which these gases are procured, suppliers in Japan will embark on major price hikes as of April, with the possibility of neon going up by 20-30% and krypton doubling.
Russia is considered to account for 70% of the current global production of neon, but as of last autumn the operational ratios of the onsite plants at the blast furnaces dropped to 50%.
It is now thought the figure may stand at just 30%.
The same types of plants in the US are continuing to operate at 60%, meaning that production of the three rare gases is greatly falling off.
Under these circumstances, the supply of rare gases – krypton and neon especially – tends to be short, and the gas majors are sounding out huge price increases to Japanese suppliers.
At the end of 2008, Japan Air Gases, a subsidiary of Air Liquide, announced a price increase of three rare gases, with the range of the price hike being implemented on an individual customer basis.
Similarly, Tokyo Rare Gas, handling products put out by Praxair, will be raising the price of Krypton on an individual customer basis, and will increase the price of neon by 20-25%.
It was Praxair which proposed a major price increase of Krypton, and for major users for whom the price is low, it is expected to be doubled.
The agony of procuring rare gas is expected to continue throughout 2009.