Demand for industrial use gases will be tempered in the three years to 2016
Los Angeles, CA (PRWEB) December 07, 2013
The industrial use gases market has a buyer power score of 3.0 out of 5. Recent pricing trends have been negative for buyers and supplier consolidation, and coupled with a high level of market share concentration, have significantly reduced buyer negotiation power. Moreover, industrial gases are essential to a number of industries, such as chemical manufacturing, metal manufacturing and oil refining. “Even consumer products rely on industrial gases; carbon dioxide is used to carbonate beverages, and in its dry ice form, is also used to keep perishables cold,” says IBISWorld procurement analyst Kiera Outlaw. “To this end, suppliers are not required to exhibit flexibility in prices as demand keeps prices high.”
“Because of relatively high profit margins, buyers can potentially negotiate better pricing,” says Outlaw. For example, energy costs are the largest cost item for producing industrial gases; in the three years to 2013, energy costs rose marginally. However, energy costs are expected to accelerate at a faster rate in the three years to 2016. Consequently, buyers can use lower energy costs as leverage in establishing better pricing terms.
Key demand drivers, such as the price of natural gas, consumer spending and industrial production, will drive demand for industrial gases and thus increase prices. Moreover, key buying markets' production levels are expected to be in full swing, making demand for industrial gases constant. However, the market is forecast to exhibit moderate price growth in the three-year period, partly due to the projected 3.1% annualized decline in corn prices during the period. The price of corn drove ammonia prices up in recent years because when corn prices rise, so too does corn production, thus increasing demand for fertilizer. Ammonia is a key input into fertilizer production. Moreover, energy costs are expected to increase, thus increasing production costs. While demand will be sustained, deceleration in demand drivers such as corn and rising input prices such as energy will support moderate price growth over the period. Major vendors include Air Products and Chemicals Inc., Airgas Inc., Kinder Morgan Energy Partners LP and Praxair Inc. For more information, visit IBISWorld’s Industrial Use Gases procurement research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of industrial use gases. Industrial use gases include hydrogen compound gases, chlorinated mixed gases, ammonia, carbon dioxide, industrial air, inert gas mixtures, hydrogen sulfide, carbon monoxide, dry ice and liquid ammonia. Industrial gases can be sold by industrial gas manufacturers and chemical and related product wholesalers and retailers. This report excludes pure and elemental gases or noble gases, such as pure hydrogen or helium.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Vendor Financial Benchmarks
Buying Lead Time
Key RFP Elements
Buyer Power Factors
About IBISWorld Inc.
IBISWorld is one of the world's leading publishers of business intelligence, specializing in Industry research and Procurement research. Since 1971, IBISWorld has provided thoroughly researched, accurate and current business information. With an extensive online portfolio, valued for its depth and scope, IBISWorld’s procurement research reports equip clients with the insight necessary to make better purchasing decisions, faster. Headquartered in Los Angeles, IBISWorld Procurement serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.