According to the Gas Review, it is estimated that the size of the Japanese industrial gas market in 2016 was up by 2.2% over the previous year, totalling ¥548.2bn ($4.8bn). This is the estimated total sales price of the main gases, carbon dioxide (CO2), hydrogen (H2), helium (He), acetylene, and electronics specialty gases.
The three air separation gases that make up 48.1% of the market; oxygen (O2), nitrogen (N2) and argon (Ar), showed promising recovery in 2016. Crude steel production was the largest use throughout the second half of the year, and capital investments in semiconductors and other electronics also experienced resurgence. However, market gas consumption has not yet been fully realised, and a full recovery is expected in 2017.
Many Japanese steel companies, such as Yawata Works of Nippon Steel, Sumitomo Metal, Kurashiki Works of JFE Steel, and Kakogawa Works of Kobe Steel, are switching to onsite supply. This is leading to expansion in the gas piping market and greater outsourcing to industrial gas companies.
Market demand for liquid products N2 and Ar remain flat, partly due to elimination and consolidation of electric furnaces.
Demand for O2 also continues to drop due to lower consumption of medical O2 for hospitals.
Lower energy costs
The industrial gas industry is one of the largest consumers of electrical energy for the production of air separation gases. The annual electrical power consumption for the entire industry is 9bn KW compared to 1% of the total national demand.
In 2016, however, fuel procurement costs decreased which lead to increased profits in spite of the stagnation in gas sales.
In the last few years a lack of expansion and demand in Japan has increased competition among manufacturers. To increase sales, each company tries to win a bigger piece of a limited pie.
Although we refer to the Japanese market as a whole, the main target segment remains the local market. The local gas market has become more important than ever before, new applications are being created for preservation in agriculture, fishing, food products, beverages, and distribution services.
The ability to form good customer relations and maximise performance in the local market will be the big touchstone to future survival in the Japanese gas market, The Gas Review says.
The Gas Review, issue no. 429