



The industrial gas year has in 2019 been characterised by the changing of the guard at the Tier One table and the resulting mergers and acquisitions (M&A) that trickle down through the industry.
The Praxair-Linde merger required the divestment of substantial business assets, including most of Praxair’s European business (sold to Taiyo Nippon Sanso, representing its first significant entry into the region), part of Linde’s American business (primarily to Messer, representing its return to the region) and most of Linde’s South Korean business (to local investors) and regional parts of both companies in India (to Air Water).
The effect of this is of course significant, not just for the changing face of the industry, but also its contribution to the overall financial picture of the industry for the year, to which considerable macroeconomic headwinds have also been a factor.
Tier 1 industrial gas companies (Linde plc, Air Liquide, Air Products and Taiyo Nippon Sanso) represent around 70% of the global industry and these companies report combined 2019 gases sales which are marginally lower than 2018, according to analysis from gasworld Business Intelligence.
This largely reflects the divestment of Linde and Praxair businesses to new owners outside of the Tier 1 companies, with the net impact of such divestments and some smaller acquisitions estimated at around -3% negative. Energy cost pass-through has had a small negative impact on combined top line growth in 2019 after having had a major positive impact in the previous year, while currency also (again) had a negative impact. After adjusting for all of these factors, underlying global growth according to the Tier One’s appears to have slowed significantly this year, we understand. This reflects the slower momentum in macro-economic drivers but also remains solidly positive – and we have to remember these projections are made at the time of writing in late October and before all of the full figures are disclosed and digested.
It has, therefore, been a mixed, but nonetheless successful year. This is especially true considering this time last year we reflected on a 2018 industrial gas year that finally saw our industry return to the kind of growth rates it is more familiar with, after a prior period of prolonged slow growth. To maintain solid growth this year, against a backdrop of significant geopolitical and macroeconomic uncertainty, is surely a positive. And that provides a solid platform for the industry to build upon in the year ahead.
2020 vision
Highlights this year include continued capacity additions (commissioned or announced) globally, the expansion of existing facilities and supply contracts (think Linde in Singapore, for example, signing the biggest single contract in its history), and continued applications growth – whether in homecare and healthcare or in the burgeoning business of cannabis where carbon dioxide (CO2) is so critical. This has been a huge talking point in the industry, especially so in the North American market.
We’ve also observed continued developments in decarbonisation and clean technologies; think CO2 capture and utilisation, hydrogen energy systems and supply, LNG storage and transportation vessels, and the range of specialty gases and instruments applied in achieving various UN Sustainable Development Goals (SDGs).
These have all been notable developments in the year gone by, as has the continued pragmatism of Air Products and the resulting financial value that is so clearly generating. Expect others to take note of this going forward, if not already.
So what does 2020 have in store, and why could it be a year of realisation? Well, the same complex and constrained supply chains will no doubt continue to be areas to keep a close watching brief on – notably argon, helium and CO2. Concern is known to building in the US where argon capacity is concerned (watch this space), CO2 has never been far from the headlines in the last few years, and in many ways helium is the gift that keeps giving in terms of headline shortages and supply swings.
Next year will also see a realisation of what the new company playing field is in the industry, of the macroeconomic position the industry finds itself in and, increasingly, of its invaluable role in the future energy mix. The latter is a big theme for our industry, have no doubt about that. The industrial gases business serves virtually every industrial sector in the global economy with its wide range of products and applications, and is often seen as a bell-weather indicator of the global economy – but it will increasingly be the epicentre for the global economy and its energy infrastructure too.
Distributive LNG and carbon capture and reuse are two big areas in shaping sustainability, and the introduction of IMO 2020 will be very notable for LNG, but the behemoth today is the hydrogen energy value chain and the role that our industry inevitably has to play in that, as evidenced by the thoughts of two of our Editorial Advisory Board (William J. Kroll and Ravin Mirchandani) and, of course, by gasworld’s launch of its H2 View platform last summer. Indeed, Kroll’s sentiments – drawn upon from decades in the industry – arguably sum this up best. “The use of hydrogen in all forms of vehicle fuelling is one of the bigger bright spots I’ve seen in my tenure with the industrial gases business industry,” he says.
Someone once said to me that if you think of the global economy as a tree, then it’s roots are deeply entrenched in fossil fuels. Now, with clean energies such as hydrogen, we are gradually uprooting that tree and growing fresh green leaves and new shoots. The branches are diversifying and a new ecosystem emerging – and our industry is at the heart of that movement.
Further consolidation in the industry’s structure will also be a theme of the year ahead, as will developments in the digitisation of our industry, something I watch particularly closely and would expect to start ramping up very soon. It will also be interesting to see if Air Products continues to realise the benefits of its concerted strategy in gasification technology over the last couple of years.
As we leave 2019 behind and look ahead to the industrial gas year that could be, all the foundations are in place for an exciting 12 months in prospect. Global headwinds are both unpredictable and unavoidable, but if our industry can realise the kind of 2020 vision outlined here, the growth opportunities could be bountiful throughout the supply chain.
Whatever the big stories are next year, you can be sure that gasworld will continue to break them, take them and deliver all the insight and analysis you need around them, backed up by our esteemed and growing Editorial Adivsory Board members around the world. See you in the New Year!