The industrial gases industry in Europe experienced a decline of 1.5% last year. Among the countries studied (the UK, France, Spain, Italy, Germany, the Netherlands, Poland, Austria), the sales forecasts for Italy and Poland are positive until 2020, according to a new study by Interconnection Consulting. Above all, the higher energy efficiency of the industrial customers makes the demand for industrial gases more sensitive.

Italy and Poland as beams of hope

The German market is the largest market for industrial gases in Europe. Last year, the market in Germany was able to generate slight gains (+ 0.3% in volume), but this was only one exception to the rule. By 2020 the German industrial gas market should shrink by an average of 1.4% per year. The Dutch market is doing even worse than the German market – it will lose 3.3% in volume in the next few years. In France, the forecast is -1.6% per year and in Spain it is -2.7%. Only Italy and Poland are spared from pessimism. In Italy, an average sales increase of 0.3% per annum is expected to be stable at least. Only Poland can expect a significant increase in the demand for industrial gases, until 2020 (+ 1.2% per annum), due to the industrial boom there.

Construction retreat

The decline in the entire industrial gas industry is reflected in the demand for the most important market segments. There is no segment that would increase its demand for industrial gases in the medium term. The most important customer segments are the construction industry and the medical-pharmaceutical & biotec industry. The latter is the largest customer segment (22.4%). The decline in the metal processing industry and the glass industry has led to a poorer forecast for the construction industry than other dismantling segments. By 2020, the demand for the industry is expected to be 1.3% per year, according to Interconnection’s forecasts.

Environmentally conscious distribution

As a result of the positive effects, the trend is increasingly directed towards the local generation of gas. The share of local gases (currently: 12.1%) will grow strongly in the coming years. Above all in Poland, a significant expansion of the pipeline network is also expected, as some large industrial gas producers are also pushing this type of transport. At present, the distribution share of pipelines is still sparse (5%). The transport of gases (32.0%) as well as packaged units (directly: 31.9% and indirect: 18.9%) to the customer are still the most popular distribution models.

Mergers in response to difficult market conditionsThe difficult market situation has resulted in the fact that some of the largest suppliers decided to join forces. Air Liquide took over Airgas and Linde also plans to take over Praxair. This should also lead to an increased market concentration in the coming years. At present, the share of the top ten companies is 77.1%.

17/10/2018

Copyright: Interconnection, Publication free of charge for coverage regarding the study and InterConnection Consulting.