Booming Development of Industrial Gases in China    

By Sun Guomin, China Industrial Gas Industry Association   

The market pattern of industrial gases in China has changed greatly in recent years. Some oxygen plants attached to large metallurgical enterprises have been spun off to become independent oxygen companies, such as the Oxygen Plant of Shougang Group, the Oxygen Company of Wuhan Iron and Steel (Group) Corporation and Jinan Baode Gas Co Ltd of Jinan Iron & Steel Co Ltd, while others have formed joint ventures with foreign companies to establish specialized gas companies, such as the oxygen plants of Hunan Valin Xiangtan Iron & Steel Co Ltd, Chongqing Iron&Steel (Group) Co Ltd, Tangshan Iron and Steel Group Co Ltd, Maanshan Iron & Steel Co Ltd and Pangang Group Company Ltd. Still others became private and joint stock oxygen companies, and the remaining ones that have not become independent or formed joint ventures have also started to supply surplus gases to the market.
    A group of gas makers such as Yingde Gases Group Company Limited, Guangdong South China Special Gas Research Institute Co Ltd and Harbin Liming Gas Group have cropped up in recent years. Six large multinational gas companies including Linde Industrial Gases, Air Liquide of France, Air Products and Chemicals, Inc. (APCI) and Praxair Inc. of the United States, Messer of Germany and Taiyo Nippon Sanso Corporation of Japan have entered the Chinese gas market, set up more than 100 large wholly-owned or joint venture specialized gas companies here and together control nearly 40% of the quality industrial gas market in China. Moreover, air separation equipment manufacturers have discarded the concept of only selling equipment and started to use air separation equipment manufactured by these manufacturers themselves to construct gas plants supplying gases to large consumers. According to statistics, 1 310 compressed gas and liquefied gas producers (including hydrogen and carbon dioxide producers, not including repackaging enterprises) and 744 dissolved acetylene producers already had industrial production licenses by 2009. China has 11 620 gas cylinder filling enterprises (that is, gas repackaging enterprises) today and 7 427 enterprises holding licenses for pressure vessel and gas cylinder manufacturing.
   The air separation equipment manufacturing sector is a barometer of the industrial gas market. The sales revenue of the air separation equipment sector in 2009 stayed roughly at the level of 2008. Moreover, some large enterprises also established new manufacturing bases to prepare for their future development.
   Hangzhou Hangyang Group completed the manufacturing of 26 sets of large air separation equipment and also manufactured 60 000 m3/h grade large air separation equipment in 2009. Sichuan Air Separation Plant (Group) Co Ltd purchased 13 hectare of land in Hangzhou Pioneer New City for the construction of heavy-duty machinery workshops and terminals to create conditions for the manufacturing and transport of large air separation equipment. Kaifeng Air Separation Group Company Limited invested RMB2.8 billion in the construction of a new manufacturing base with an area of 78 hectares. The new base will be able to make 80 000 m3/h grade air separation equipment and also can manufacture large coal chemical equipment, large ethylene cold boxes and special containers and equipment. Shaanxi Blower (Group) Co Ltd acquired industrial gas manufacturing service contacts of constructing one large air separation unit for Shaanxi Coal and Chemical Industry Group Co Ltd and Shijiazhuang Jinshi Chemical Fertilizer Co Ltd respectively. It is another equipment manufacturing enterprise that got involved in industrial gases after Sichuan Air Separation Plant (Group) Co Ltd and Hangzhou Hangyang Group. The move will produce new implications on the industrial gas sector.
   Yingde Gases Group Company Limited already had the capacity to produce 550 000 m3/h of industrial gases before 2009. It spent nearly RMB2.0 billion in purchasing four 60 000 m3/h air separation units from Baotou Shenhua Coal Chemical Co Ltd in 2009, becoming a large industrial gas enterprise with a total capacity of nearly 800 000 m3/h.
   Baosteel Group Corporation made a strategic decision in 2008 to take industrial gases as an additional business division. It allocated RMB3.0 billion to its subordinate company Baosteel Metal Co Ltd in 2009 to develop the industrial gases business. It will spend RMB2.5 billion between 2008 and 2012, increasing its share in the eastern China gas market to 15%.
   A group of small private gas companies such as Shandong Longkou East China Gas Co Ltd, Nanjing Special Gas Plant Co Ltd, Guangdong Huate Gas Co Ltd, Zhejiang Haitian Gas Co Ltd, Harbin Liming Gas Group and Sichuan Qiaoyuan Gas Co Ltd have also expanded their business with the sales revenue exceeding RMB100 million in 2009.
   Air Liquide plans to invest 1.5 billion Euros in China from 2007 to 2011. RMB120 million has already been spent in Shenzhen in establishing a wholly-owned subsidiary, Air Liquide (Shenzhen) Co Ltd, which has become the only supplier of large-volume gases, electronic gases and special gases for the Shenzhen project of Semiconductor Manufacturing International Corporation (SMIC). It has made huge investments in Tianjin Binhai Industrial Area in the construction of an industrial gas supply center that almost monopolizes the entire industrial gas market in Tianjin Binhai New Industrial Area. It also invested 60 million Euros to build a super large air separation unit with a capacity of 2 700 t/d to make a long-term supply of industrial gases to Shaanxi Yulin Natural Gas Chemical Co Ltd. The company also invested 100 billion Euros to get 13 industrial gas supply contracts for China's top three solar cell manufacturers - Wuxi Suntech Power Holdings Co Ltd, JA Solar Holdings Co Ltd and Chengdu Yingli New Energy Co Ltd.
   Praxair signed a 15-year industrial gas supply contract with Bayer (Shanghai) in 2009. Its third air separation unit supplying gases to Jinlong Copper Co Ltd started production in February 2009. The large air separation unit it constructed to supply gases to the 600 000 t/a acetic acid unit of Jiangsu Sopo Group started production in December 2009.
   Linde Industrial Gases agreed to construct a 90 000 m3/h air separation unit for Shaanxi Coal Chemical Energy Limited in 2009 to feed the 1 million t/a methanol/dimethyl project. The equipment is the biggest air separation equipment in China today. Linde Industrial Gases constructed a gas unit in collaboration with Sichuan Vinylon Works, supplying industrial gases to the Works. It constructed two 39 000 m3/h air separation units in Wanhua Industrial Park to match the Ningbo second-phase project of Yantai Wanhua Polyurethane Co Ltd and also constructed a 30 km new gas pipeline connected to Beilun port of Ningbo.
   APCI acquired an agreement from PetroChina Company Limited in 2009 to establish a joint venture company Chengdu Air Products Co Ltd to supply industrial gases to the refining and ethylene integration project of PetroChina in Sichuan province. It announced the purchase of the four existing air separation units of Xingtai Iron & Steel Corp Ltd. The company signed a turnkey gas supply contract with DuPont Solar (Shenzhen) Co., Ltd. to supply large-volume liquefied gases and special gases to an amorphous film photovoltaic plant recently constructed by DuPont China in Shenzhen Guangming New District. It signed a framework agreement with Qinghai Provincial Development and Reform Commission to participate in the development, construction and product supply of industrial gases related chemical projects in the province