North American Industrial Gases Sector Maintains Strength

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Researched by Industrial Info Resources (Sugar Land, Texas)--Producers of industrial gases such as oxygen, nitrogen, argon, hydrogen, helium and others outperformed almost all segments of the Chemical Processing Industry (CPI) during the past couple of years, even when the CPI was enjoying consistent and healthy growth. Over the past year, as challenges mounted for the chemical industry, industrial gases producers cut or reduced spending like so many of their peers, although spending has remained surprisingly strong so far this year. Industrial Info has confirmed more than $158 million in capital projects already completed this year within this segment of the CPI, with significantly more planned during the next 12 months.

Industrial gas producers are diversified across enough infrastructure and niche markets that it seems they most often find an attractive place in the market whether the overall economy is up or down. The construction of new ethanol capacity has been down during the past year, reducing carbon-dioxide production opportunities, while the Pharmaceutical & Biotech Industry has remained a reasonably stable niche on which to continue focusing. The demand for medical-grade gases could be a long-term opportunity, as there appears to be plenty of momentum in the segment based on current forecasts. Like pharmaceuticals, the Food & Beverage Industry presents an attractive niche market for industrial gas producers that are often viewed as somewhat recession resistant.

These few niche markets surely help maintain a certain level of demand for industrial gases, but they don't eliminate the need for a strong industrial market for long-term success. For the past couple of weeks, indicators that the economy is slowly improving have shown themselves in the form of increased housing starts and mortgage applications, consumer confidence and durable goods. As these indicators continue to hold their gains or even improve, the expectation is that demand on the industrial market will follow. Looking ahead over the next 12 months, an estimated $1 billion of capital spending is planned in this segment of the CPI, including a couple of very large hydrogen unit additions. Nearly half of this spending was originally planned to begin construction this year, but was delayed to 2010.

Industrial Info Resources (IIR) is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy related markets. For more than 26 years, Industrial Info has provided plant and project opportunity databases, market forecasts, high resolution maps, and daily industry news.