Industrial Gases – Procurement Best Practices & Sourcing Strategies

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Industrial Gas Procurement Market Size

Data from ELINT Market Research’s industrial gas procurement market research report indicates that the industrial gas sector has a bright future. The industry has reached $128.6 billion in global sales by 2022. The story becomes even more promising, with anticipated significant growth and a projected Compound Annual Growth Rate (CAGR) of 12 and 14%. This trend suggests that the industry’s fortunes have significantly improved. Experts estimate that the industrial gas market will have grown to $185 billion by 2025. This positive outlook highlights the industry’s potential and resilience and provides a buoyant environment for investors, stakeholders, and businesses operating in the industrial gas sector.

The industrial gas market will witness significant growth as research estimations state several industries’ present conditions and potential to grow in the coming years. The industry’s global market is bound to succeed in the forecast tenure of breakthroughs and escalated significance in several applications. This upward tendency is the cause of the growing demand for industrial gases in several industries like electronics and healthcare. The trends collectively indicate that with industrial activity ramping up and buoyant global indications in terms of economic activity, this could help expand the industrial gas procurement market. The industry stakeholders tapping the market to probe the lucrative prospects have to take such statistics into note, which point towards previous successes and work upwards towards an optimistic future in this business filled with dynamism and keeps on changing at every step.

Market Definition

The industrial gas sector is critical to the transformation of many sectors because it provides the necessary elements to support essential activities and increase operational efficiency. Industrial gases are required for various uses, including manufacturing and medicine. The industry initially focused on producing and distributing oxygen, nitrogen, and argon. Still, it has grown to include specialty gases and carefully blended gas mixtures to satisfy particular industrial requirements.

Industrial Gas Procurement Market Drivers

1. Increasing Demand from End-User Industries: The rising demands of numerous end-user industries, such as electronics, healthcare, and manufacturing, are driving the growth of the industrial gases market. The sectors that mainly depend on industrial gases for their operations.

2. Technological Advancements: Innovative technologies, like membrane separation methods and cryogenic distillation, are being applied to enhance the quality and purity of industrial gases while also driving market expansion.

Industrial Gas Procurement Market Challenges

1. Supply Chain Disruptions: Several events that disrupt the supply chain hinder the timely delivery of gases to end users, impacting the industrial gas sector. Natural disasters, geopolitical unrest, and global events can all cause supply chain disruptions.

2. Stringent Regulatory Standards: For industrial gas producers, adhering to strict quality and safety standards is becoming increasingly difficult due to growing regulatory requirements and traditions.

Industrial Gas Procurement Market Opportunities

1. Focus on Research and Development: Research and development efforts focused on promoting innovative uses of gas and related technologies could lead to significant market potential for the industrial gas industry.

2. Transition to Renewable Energy Sources: Opportunities exist for the industrial gas sector due to the global switch to renewable energy. Hydrogen-producing industrial gas generators have new growth opportunities.

Industrial Gas Procurement Market Segmentation

1. Gas Type: According to gas type, the industrial gas procurement market research report classifies the market into Nitrogen, Oxygen, Hydrogen, Carbon Dioxide, and Argon.

2. End-Use Industry: Based on the end-use industry, the industrial gas procurement intelligence market research report segments the market into Manufacturing, Healthcare, Electronics, Chemicals, and Food and Beverage.

3. Production Process: As per the production process, the industrial gas procurement market research report divides the market into Cryogenic Distillation, Pressure Swing Adsorption (PSA), Membrane Separation, and Chemical Processes.

Regional Outlook of the Industrial Gas Procurement Market

A geographical analysis reveals that some regions’ industrial gas markets are highly mature, indicating a sizable and established industrial gas industry. The United States, Canada, and Australia stand out due to their developed market ecosystems, robust regulatory frameworks, and cutting-edge infrastructure. With significant market penetration, efficient supply chains, and high technological integration, these countries’ industrial gas industries have developed into a sophisticated state. An essential component of the more significant industrial ecosystem in these high-market-maturity areas, the industrial gas procurement market attracts investors and stakeholders eager to participate in robust and stable markets.

Industry participants face distinct opportunities and challenges compared to regions with medium market maturity. South Africa and Brazil’s industrial gas market is expanding and changing, making them suitable candidates for this criteria. Increasing industrialization, a rise in the need for industrial gases, and the development of crucial regulatory frameworks characterize this transitional period that these countries are going through. Consequently, investors have a dynamic picture of these medium-market-maturity locales. Firms must comprehend the intricate market conditions in high- and medium-maturity areas to effectively navigate the diverse industrial gas industry and leverage the varying stages of development and market dynamics.n

Cost Component in the Industrial Gas Procurement Market

The pricing of industrial gases is a significant factor that influences market dynamics. Approximately 30 to 40% of the total cost of atmospheric gas distribution is derived from electricity, making it a significant contributor. The impact of this cost factor on pricing strategies and overall market competitiveness makes it crucial for businesses operating in the industrial gas sector.

Delivery Models in the Industrial Gas Procurement Market

The distribution methods used by the industrial gas market are diverse to meet the specific requirements of different industries. They include Bulk/Merchant, Cylinder/Packaged, and On-site/Pipeline models. Every model has its purpose and considers the particular needs of companies in various industries. When selecting a distribution plan, stakeholders’ strategic decisions impact pricing, efficacy, and general customer satisfaction.

Pricing Outlook in the Industrial Gas Procurement Market

Pricing is a significant factor in determining dynamic industrial gas market dynamics. On a year-over-year (Y-o-Y) basis, the Producer Price Index (PPI) is expected to rise by 4-5% in 2023. The industry values dynamic pricing strategies greatly because they impact market trends and provide insight into the overall state of the economy. This upward trajectory highlights this importance.

Engagement Strategies in the Industrial Gas Procurement Market

Engagement strategies are crucial to developing and maintaining relationships in the industrial gas sector. Offering end-to-end services, combining related services into one, and providing a single specialized service are some methods market participants use. These strategies seek to forge enduring relationships, raise customer satisfaction, and satisfy various client demands.

Contract Period in the Industrial Gas Procurement Market

Contract terms are an essential aspect of the industrial gas market, depending on the supply methods employed. For the delivery of tons, contractual obligations are typically longer-term, lasting at least 15 years. They differ from large-scale deliveries because they are usually three to five years long. Conversely, delivery contracts for cylinders or packaged goods are typically shorter, lasting under a year.

Negotiation Factors in the Industrial Gas Procurement Market

The industrial gas market provides a natural setup for negotiations on several factors. Cost, quality, and conditions of delivery emerge as the crucial points. Unless a clear-cut standpoint framework is drawn concerning such types of core issues of negotiation, the balancing of interests of the suppliers and purchasers shall be rendered unattainable. Effective negotiations lead to a win-win agreement, building an adorable relationship that positions participants for success in the fiercely competitive industrial gas markets.

Leading Players in the Industrial Gas Procurement Market

Some of the leading industrial gas markets include TNSC (Taiyo Nippon Sanso Corporation), the company of giants in the production of gas; Linde Plc, the forerunner to be known for its invention and worldwide penetration; Air Liquide, an ultimate strength in terms of portfolio diversity; Air Products, the fortress of set sustainability and innovation; and Messer, trusted company, reliable and safe. Those industry leaders who can take full advantage of those collective competitive advantages will shape the competitive landscape accordingly, driving the space forward and innovating at every turn.