Prediction and Analysis of the Development Prospect of China's IG Industry in 2021 by《GASonline》

The COVID-19 Pandemic imposed a great impact on China's overall economy, and all industries were basically at a standstill in the first two quarters of last year of 2020.

Starting from the second quarter of 2020, the capacity utilization rate of coal mining and washing industry was 69.6%, that of food manufacturing industry was 70.4%, that of textile industry was 72.7%, that of chemical raw materials and chemical products manufacturing industry was 74.2%, that of non-metallic mineral products industry was 68.2%, that of ferrous metal smelting and calendering processing industry was 78.4%, and that of non-ferrous metal smelting and calendering processing industry was 79.2%. General equipment manufacturing industry is 77.3%, special equipment manufacturing industry is 77.6%, automobile manufacturing industry is 74.6%, electrical machinery and equipment manufacturing industry is 78.1%, and computer, communications and other electronic equipment manufacturing industry is 78.4%.

Mr. FRANK XU, Chairman of (China IG Members Alliance-CIGMA) and founder of GASonline, gave the following analysis and forecast on the development prospect of China's IG industry in 2021.

1. The business model of the IG industry
   At present, the business model of China's IG industry can be divided into two types: self-built device gas supply and outsourced gas supply, while outsourced gas supply can be divided into three gas supply modes: liquid gas, pipeline gas and cylindered gas.

2. Market scale analysis
   With the pace of reform and opening up, China's IG has begun to take shape in the late 1980s and began to develop rapidly in the late 1990s. In 2010, the scale of China's IG market reached 41 billion yuan, an increase of 67% over 2005, and its share in the global market increased to 10.6%. In 2015, China's IG market reached nearly 100 billion yuan, and in 2019, China's IG market reached 147.7 billion yuan. The share of the global market has increased to about 17%, and China's IG market is expected to reach nearly 160 billion yuan by 2021.

3. Industry Prospect Forecast
   (1) Economic growth promotes the development of the industry.
   IG growth is highly related to economic growth, benefiting from the sustained and rapid development of China's economy, the IG industry has also ushered in a golden period of development. Since the Reform and Opening up, China's macro-economy has maintained sustained development for more than 40 years, the downstream industries such as metallurgy, chemical industry, machinery manufacturing, electronic information, semiconductors and so on have been developing and growing, and the demand for air separation gas has continued to grow. In 2010, the size of China's IG market was only 41 billion yuan. By 2019, the market size of China's IG industry has increased to 147.7 billion yuan, with an average annual compound growth rate of 15.30%. In 2018, China's per capita IG consumption is less than 1/26 of the United States, and less than 1/20 of Western Europe and Australia. Compared with the developed countries in Europe and the United States, the per capita IG consumption in China is still very low, and there is still much room for growth in China's IG market.

In general, the scale of a country's industrial manufacturing should match the global share of the IG market. In 2019, China's industrial added value accounts for 24% of the global industrial added value, while the consumption of IG is only 17% of the world's, which is a serious mismatch. China's IG still has great potential for growth.

2. Energy conservation, environmental protection and technology upgrading release potential demand.
   With the increasingly prominent problems of energy shortage and environmental pollution, "energy saving and emission reduction" has been paid more and more attention by the state and society. In the traditional application fields of air separation gas, such as metallurgy, chemical industry and so on, as a high energy consumption, it is very urgent to innovate the production process to reduce energy consumption.

With the improvement and upgrading of traditional industrial production technology, the potential demand of air separation gas stock market can be released on a large scale. Taking the metallurgical industry as an example, smelting reduction ironmaking is an advanced smelting technology that simplifies the process, reduces power consumption and reduces dust emissions. This process uses high-pressure industrial pure oxygen instead of oxygen-enriched air, which is the future development direction of the iron and steel industry.

According to the forecast of China Merchants Securities Research Center, if 20% of China's existing iron and steel smelting capacity carries out this technical transformation, it will bring oxygen production demand of up to 5 million Nm / h. In the field of thermal power generation, IGCC (integrated coal gasification combined cycle) power generation technology can increase the net efficiency of power generation to 45%, while the pollutant emissions are only 10% of those of conventional coal-fired power plants, while reducing water consumption by 50% and 70%. If the IGCC technical transformation is carried out on 10% of the thermal power plants in China, the required oxygen production capacity will be more than 12 million Nm ³/ h.

On the third point of the forecast, Mr., FRANK XU particularly stressed that China will explore new potential for IG development in emerging industries, which will be the main new demand for IG in the future. The sources are new energy, new materials, electronics, semiconductors, environmental protection, bio pharmaceutical and other emerging industries. Benefiting from the strong promotion of the national industrial policy, the above emerging industries have developed rapidly in recent years, and the demand for IG has expanded rapidly, which has greatly speeded the development space of the IG industry, while it also smoothed the demand fluctuation of the IG industry affected by the business cycle of traditional industries.

The Outline of the Thirteenth Five-year Plan for National Economic and Social Development of the People's Republic of China proposes to increase the added value of strategic emerging industries to 15% of GDP. The State's committed support for the development of strategic emerging industries will enhance the rapid development of related industries, and the air separation gas industry as an upstream industry will usher in good opportunities for development.