It may be a nascent market in India in comparison to the United States and other Western countries for now, but is growing by leaps and bounds, supported to a large extent by steel and mining sectors.
The increasing use of industrial gases for production of steel and other metals, so also for use in the automotive, manufacturing, and chemicals sectors, is clearly driving demand. This is reflected in the year-on-year increase in the usage of gases such as industrial oxygen, nitrogen and argon, among others. Current levels of annual growth are at an average 14 percent. Much of it has also got to do with the industries’ production processes maturing, and turning to effective processes that cut time, increase productivity and reduce costs.
According to a report released last month – India Industrial Gases Market Forecast & Opportunities, 2018 – the industrial gases market in India was expected to grow at CAGR of 14 percent by 2018. Another report by Transparency Market Research has pegged the Asia-Pacific growth, led by India and China, to be at a CAGR of 7 percent between 2012-2018, the fastest across all regional markets. India, incidentally, is the largest producer of industrial gases in South Asia.
The growth in India is especially seen in tonnage plants as well as merchant or small-sized plants. Similarly, the industrial gases market is also being largely influenced by the rapid development of the steel and refineries sectors, concentrated in the eastern and southern parts of the country, not to mention a growth in light engineering industries as well as the metal fabrication industry.
In 2012, India’s gas industry size was over US $1 billion, moving up from the annual turnover of about $650 million in the previous year. There are over 300 small and medium size plants, and about 25 large tonnage plants in India, supplying gases through pipelines to captive customers or in cryogenic transport tanks for bulk deliveries.
In a recent interview to the Business Standard, Managing Director of Linde India Ltd Moloy Banerjee said sectors like pharmaceuticals, automotive, manufacturing, plastics, chemicals, consulting services, infrastructure, mining and services will be the factors that will drive the demand for gases. Linde India, formerly known as BOC India Ltd, has been in the industrial gases business for over 70 years.
A few weeks ago, Praxair India Pvt Ltd, a subsidiary of global industrial gases major Praxair Inc, signed two long-term contracts with JSW Steel to run on-site nitrogen plants in the Indian state of Maharashtra. The nitrogen is to be used in the manufacturing processes for both cold-rolled and galvanized steel. Reports say Praxair, a leader in the global industrial gases business, has been expanding its presence in India through projects like these.
About three years ago, another company, Air Liquide, has announced a long-term agreement with the government-owned steel company in India, Rashtriya Ispat Nigam Limited (RINL) for the supply of oxygen and nitrogen to meet the needs of the latter’s expansion from 3 million tons to 6.3 million tons per year of steel in another state, Andhra Pradesh.
In fact, analysts in this field say steel constitutes one of the biggest markets for industrial gases in India since a steel plant, otherwise using the traditional coal in the manufacturing process, can alternate it with oxygen, nitrogen, argon and other specialty gases.
What do you make of this? Do you think this trend will continue? Leave a comment below!