Prices have been rising as demand from manufacturing and mining companies has increased.
Los Angeles, CA (PRWEB) July 01, 2014
The industrial use gases market has a buyer power score of 2.2 out of 5. Recent pricing trends have been negative for buyers; supplier consolidation, coupled with a high level of market share concentration, has also 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,” says IBISWorld research analyst Kiera Outlaw. “Carbon dioxide is used to carbonate beverages and, in its dry ice form, is used to keep perishables cold.” To this end, suppliers are not required to exhibit flexibility in prices because steady demand keeps prices high. Current major suppliers include Air Products and Chemicals Inc., Praxair Inc., Kinder Morgan Inc., Aargas Inc. and BASF.
The average profit margin in the market is high, though, meaning buyers can potentially negotiate better pricing. However, energy costs are the largest cost item for producing industrial use gases, and in the three years to 2014, the price of electric power has risen at an estimated annualized rate of 1.1%. According to Outlaw, energy costs are anticipated to accelerate at a faster annualized rate in the three years to 2017.
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, keeping demand for industrial gases constant. However, the market is forecast to experience continued moderate volatility in prices in the three years to 2017. Moderate volatility in pricing leaves buyers subject to sudden price increases during the period. To hedge against the risk, buyers should enter into contractual agreements now to lock in current rates. To further protect themselves, buyers should also consider instating terms in the contract that places some restrictions on when the supplier can increase the price, such as when production costs rise. For more information, visit IBISWorld’s Industrial Use Gases procurement category market 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
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.