The new pattern and development situation of industrial gases

The new pattern and development situation of industrial gases

The industrial gas industry has a long history of more than 140 years. In 1912, my country's first air separation system was born. After the reform and opening up, industrial gas engineering was also the first industry in China that was opened to foreign capital, and the industry developed earlier.

　　 At present, there are four major gas companies in the world: Linde Group of Germany, Air Liquide Group of France, AP of the United States, Praxair of the United States, which are the four major international giants. Among them, Linde and Air Liquide account for 15 to 20% of the global share, with annual sales of about 20 billion U.S. dollars; AP and Praxair of the United States follow closely behind, with sales of about 10 billion U.S. dollars.

　　In the future, the industry will continue to integrate. Air Liquide acquired AirGas in 2016. Praxair and Linde are currently discussing a merger, and the new Linde Group will dominate.

　　Domestic pattern: The main customer of industrial gas-steel manufacturers, is actually the main supplier of industrial gas. The largest domestic Baosteel Gas, Wuhan Steel Gas, and Guangzhou Steel also have industrial gas business. Currently a joint venture between Guangzhou Iron and Steel and Linde, specializing in industrial gas business.

　　 Gas business is divided into three sections from the transportation method:

　　1) Wholesale business (pipeline gas), which delivers gas to customers through pipelines, suitable for large steel and refineries;

　　2) Bottled gas business, small construction sites, auto repair shops, etc. use more steel cylinders;

　　3) The liquid product business is mainly transported by industrial tankers, and the downstream is also relatively extensive, including steel mills, electronics, chemicals, medicine, cement, automobiles, etc., covering most industries in the industry.

　　 Currently, there is basically no inventory in the oxygen retail market. One characteristic of liquid products is that during storage, evaporation occurs, and about 3% is lost every day, so they cannot be stored.

　　The key point of the chain effect comes from the principle of air separation. The air separation device cannot be started and stopped at any time, and it is not easy to resume production after stopping. Steel plants now need oxygen. Not only do they do not produce enough oxygen, they also need to buy liquid oxygen from the market to support their own production.

　　 Liquid product prices fluctuate greatly?

　　 This year, liquid products have the biggest price fluctuations. The price increase mentioned should be liquid price increase. Liquid products are divided into air products and non-air products. Non-air product liquid CO2 prices are at historical lows. The main reason is that the prices of air products, liquid oxygen and liquid nitrogen, are rising.

　　 Historically, the prices of oxygen and nitrogen have always been the same. In the winter of 2015, the product price is about 400-500RMB. In 2016, this price level climbed to 700-800RMB.

　　Price increases also have regional characteristics. From the perspective of several regional markets, the demand in the East China market and the southern market is relatively large, and the price fluctuations are relatively small; the northern market is not large, so the price fluctuations are relatively large.

　　 In terms of supply in the liquid market, in addition to supply from gas companies, customers who bought air separation plants in the past also have equipment and sources of supply. Roughly estimated, in the Chinese market, the four major gas companies + Hangyang + Yingde accounted for no more than 50% of the supply of liquids in the liquid market, and the remaining 50% of the supply is in the hands of the steel industry and the refining industry (and A small part is in the electronics industry), such as Baosteel’s gas company and Sinopec’s refining and chemical projects.

　　Under the pressure of the country's industrial adjustments and environmental protection requirements, steel plants have been under pressure to limit production since 2016, and the air separation plant cannot be quickly recovered after shutdown. The state's restrictions on the production of second and third-line steel plants have led to a decline in production capacity, and the air separation units of some small steel plants have ceased operation. However, starting this year, the price of the steel industry, the profitability of the steel industry has increased, and the output of steel plants has resumed. The steel industry is booming, and blast furnaces, converters, and lean furnaces all need oxygen. Some steel plants even bind prices to sign long-term contracts with gas manufacturers, and directly choose to sign a five-year long-term contract with a price of 2,000 yuan/ton.

　　The industrial gas industry itself has seasonal fluctuations. In summer, production capacity drops and prices are high. In winter, production capacity increases and prices begin to fall again. This phenomenon is mainly related to the performance of the compressor. The operation of the air separation plant needs to reduce the gas temperature to -180 degrees. In summer, the temperature is high, the temperature difference is large, the compressor load is large, the production end cannot reach full production, and the production capacity will drop by several points. In a market where supply and demand are balanced, a decline in supply will have a greater impact on prices. Therefore, recent rounds of price increases are also related to summer factors.

　　 The issue of power curtailment in the summer has led to limited production capacity in the industrial gas industry. The demand for electricity curtailment is serious this year, and industrial gas companies are the key curtailment target. Air separation plants are big power consumers, and industrial gas manufacturers such as Linde have received power rationing requirements. The weather in East China this year is extremely hot, and the situation of electricity curtailment is very serious, resulting in even more insufficient supply in the state of low production.

　　 Is there an upper limit for gas rise?

The downstream industrial gas is relatively extensive, including steel mills, electronics, chemicals, medicine, cement, automobiles, etc. These downstreams have a very high tolerance for oxygen prices. The main reason is that industrial gases generally account for only a percentage of the downstream manufacturing costs. Digits, customers are not sensitive to price increases, but they are indispensable. From 2009 to 2010, the z* height of liquid argon in East China rose to 40,000-50000 RMB/ton. The prices of liquid oxygen and liquid nitrogen have hit a new high since 2004. Historically, they have reached a similar peak in 2009-2010.

　　The current oxygen retail market demand status?

　　Professional gas producers, most companies can achieve 100% utilization of production capacity. For a new air separation unit, the construction period will take about 2 years, and capital investment will cause a certain entry barrier for the industry. It is expected that in the next six months, the air separation units that were stopped some time ago in some steel plants can be restarted. In addition, some small companies in the market go to the market to buy second-hand air separation and quickly produce oxygen for sale in the market.

　　What is the long-term contract mode?

　　 Both pipeline gas and liquid markets have long-term contracts. The liquid market for more than 3 years can be considered as a long-term contract. Liquid prices have risen very well this year, and suppliers generally choose to sign contracts for about half a year.

　　Pipeline gas price determination includes: fixed price + variable price. Gas manufacturers need a return on investment for customers to construct equipment. Regardless of whether the equipment is started or not, they need to pay this fixed price, which is paid on a monthly basis. The specific amount depends on the scale of the equipment (15 years of depreciation according to the initial investment scale of the equipment, and monthly apportionment ). The remaining variable costs include electricity, steam, labor costs, etc. Electricity driven equipment generally accounts for 70-80% of the variable cost, and the variable price is generally between 4 and 80 yuan/square.

　　 Can the liquefaction ratio be determined autonomously after oxygen separation?

　　 The gaseous and liquid products produced by the air separation plant will be proportioned in advance. There is an indicator TPD/ton per day in the industry, that is, the maximum liquid product output. This indicator cannot be changed after the air separation device is manufactured.

　　The air separation unit is set up according to the fixed amount and variable. The fixed customer gives the company a basic amount, and the amount of liquid placed on the basic amount is generally reserved for 10-20% to develop the third-party market. In the past, 40,000 to 60,000 cubic meters of air separation produced about 500 tons of liquid per day. Now there are large equipment and 2,000 tons of liquid. This amount depends on the market demand within a region or a sales radius (liquid oxygen and liquid nitrogen within 200~300 kilometers, liquid argon within 300~500 kilometers) where there is a large demand, more liquid production is required, and the demand is small. Not even worthy of liquid output.

　　 How to calculate the oxygen production capacity and unit production cost?

　　 The start-up time of the air separation plant is 24×365, and the production capacity is calculated based on this. The cost is fixed cost + variable cost. The total fixed cost investment is depreciated for 15 years, and the annual depreciation expense is the main fixed cost; in the variable cost, 1 oxygen corresponds to less than 1 kWh of electricity, which accounts for 70-80% of the variable cost. According to the electricity bills of different regions, different regions are calculated The cost of oxygen production.