Industry Overview: "The Blood of Industry": Independent Innovation is Imperative
Industrial gases are known as the 'blood of industry'. According to different application fields, industrial gases can be divided into two categories: bulk gases and specialty gases.
Bulk gases refer to industrial gases with purity requirements below 5N and high production and sales volume; According to different preparation methods, it can be divided into air separation gas and synthesis gas. Air separation gas is mainly produced by separating air, including oxygen, nitrogen, argon, etc. It has a wide range of downstream applications and large quantities. Synthetic gases mainly refer to ammonia, methane, and acetylene, and their preparation methods are completely different from those of air separation gases. Special gases refer to industrial gases that are applied in specific fields and have special requirements for purity, variety, and properties. Depending on the application field, they can be divided into standard gases, medical gases, laser gases, food gases, electric light source gases, and electronic special gases.
From the perspective of market demand, according to publicly available data, bulk gas accounted for the highest proportion of domestic industrial gas demand in 2020, about 80%. The demand for specialty gases accounts for 20%, of which electronic specialty gases account for 60%. In recent years, with the rapid development of the domestic electronics industry and related policy promotion, the market share of specialty gases represented by electronic specialty gases is increasing year by year.
From the perspective of industrial structure, the upstream of the industrial gas industry chain mainly involves manufacturers of air separation equipment and suppliers of chemical raw materials. The main downstream application areas include smelting, petrochemicals, welding, and metal processing. From the perspective of gas types, the downstream of bulk gases is mainly in traditional industries such as metallurgy and chemical engineering, with a high demand for gases and low requirements for gas purity. The downstream of specialty gases involves emerging industries such as semiconductors, biomedicine, food and beverage, and new energy. There are many types of gases in demand, with small individual gas requirements and high gas purity requirements.
According to Tianyancha data, as of now, there are over 3050 industrial gas related enterprises; Among them, from January to October 2023, more than 60 newly registered related enterprises were added;
In terms of regional distribution, Jiangsu ranks first in the region with over 480 households; Guangdong and Hebei have over 370 and 180 respectively, ranking second and third;
From the perspective of establishment time, 25.3% of related enterprises were established within 5-10 years, and 54.5% of related enterprises were established more than 10 years ago.
Market size: The domestic market size is in the billions, presenting an oligopolistic competition pattern
With the growth of our country's economy, the gross domestic product has maintained a high growth rate for a long time. The rapid expansion of the market, continuous improvement of industrial structure, and rapid increase in industrial output value have all brought about a huge demand for industrial gas products.
Global industrial gas supply and demand continue to grow. Due to the widespread application of industrial gases in the industrial sector, the demand for downstream industries worldwide has maintained a stable growth trend over the long term. According to Frost&Sullivan, the global industrial gas market is expected to expand from approximately $134.8 billion in 2020 to approximately $1755 billion by 2025, with a 5-year CAGR of 5.4%.
China is the world's largest industrial gas market, with growth rates consistent with the overall industrial growth trend. China has replaced the United States as the world's largest industrial gas market in 2020, with a market size of 23.7 billion US dollars, accounting for 17.6% of the global market. Compared to the growth rate of China's industrial added value and industrial gas industry since 2015, the growth rate of the industrial gas market largely depends on the overall development pace of the industry. According to Frost&Sullivan, the size of China's industrial gas market is expected to reach 232.5 billion yuan by 2025, with a 5-year CAGR of 8.6%. In contrast, the CAGR in the United States is 3.8%, indicating a stronger growth momentum for China's industrial gas market.
The international industrial gas market share is mainly occupied by two giants, Linde and Air Liquide. In terms of global industrial gas market share, two industrial gas groups, Linde from Germany and Air Liquide from France, are advancing hand in hand. In 2021, their global market share was 21% and 20% respectively. The second tier companies, Air Products from the United States and Daiyang Riacid Industrial Gas Company from Japan, had market share of 7% and 5% respectively in 2021.
Main Category Analysis: From Smelting to Lithium Battery Industry Gas Applications' Everywhere '
The continuous optimization of industrial gas demand structure is essentially related to changes in industrial structure, from traditional metal smelting and chemical energy to emerging industries such as lithium batteries and semiconductors, with increasing application areas supporting the development of different industries.
Electronic specialty gas: a key material in the electronics industry, with a continuous increase in localization rate
Electronic special gas is a key material in the production and manufacturing process of the electronics industry. Electronic gas is an essential and critical material in the production and manufacturing processes of industries such as integrated circuits, display panels, semiconductor lighting, and photovoltaics. In integrated circuit manufacturing, it is the second largest manufacturing material after silicon wafers, accounting for 13% of wafer manufacturing costs. Electronic gases include bulk electronic gases and electronic specialty gases. Electronic specialty gases are mainly used in processes such as photolithography, etching, film formation, cleaning, doping, and deposition.
Electronic specialty gases account for over 60% of the demand for specialty gases. Electronic specialty gases belong to the sub category of specialty gases. In 2021, China's specialty gases accounted for 19% of industrial gas demand, with electronic specialty gases accounting for 63% of the specialty gas market. Against the backdrop of downstream demand growth driving accelerated investment in the semiconductor industry, and the continuous promotion of "carbon neutrality" and "carbon peak" for the development of the photovoltaic industry, the demand for electronic specialty gases will continue to maintain high-speed growth.
The integrated circuit field has the largest proportion in the demand for electronic specialty gases. The downstream application areas of electronic technology include emerging industries such as integrated circuits, display panels, LEDs, and solar cells. From a global perspective, the demand for electronic specialty gases used in the integrated circuit industry accounts for 71% of the total market demand, and the demand used in the display panel industry accounts for 18% of the total market demand; From the perspective of China, the demand for electronic specialty gases applied in the integrated circuit industry accounts for 42% of the total market demand, and the demand applied in the display panel industry accounts for 37% of the total market demand.
Hydrogen: Positive policies continue to emerge, and hydrogen fuel cells drive the expansion of the specialty gas market
China's hydrogen production exceeds 40 million tons, with enormous potential for hydrogen supply. According to IEA data, the total global hydrogen production reached 94.23 million tons in 2021, an increase of 5.5% year-on-year. The production is expected to reach 179.98 million tons in 2030, with a CAGR of 7.5% from 2021 to 2030, indicating rapid industrial development. At present, China has become the world's largest producer of hydrogen. According to data from the China Coal Industry Association, China's hydrogen production reached 40.04 million tons in 2022, a year-on-year increase of 32%, accounting for 28% of global hydrogen production in 2021. In addition, China has the world's largest installed capacity of renewable energy and has enormous potential for clean and low-carbon hydrogen supply.
The hydrogen fuel cell market maintains high-speed growth, with over 300 domestic hydrogen refueling stations. Due to the impact of the epidemic and policies, the market size of China's hydrogen fuel cell industry was 3 billion yuan in 2020, a year-on-year decrease of 40%. With the entry of energy central enterprises such as Sinopec and PetroChina, the number of domestic hydrogen refueling stations has significantly increased, the network of hydrogen refueling stations has taken shape, the hydrogen fuel cell industry is becoming more complete, and downstream applications have significantly increased. As of 2022, China has built a total of 310 hydrogen refueling stations. With the continuous improvement of domestic hydrogen energy infrastructure in the future, it is expected that the market size of China's hydrogen fuel cell industry will reach 23 billion yuan by 2023, with a compound annual growth rate of 46% from 2019 to 2023.
The domestic demand for hydrogen continues to grow, with the highest proportion of hydrogen used in the industrial sector. According to the prediction of the China Hydrogen Alliance, under the goal of carbon neutrality, the annual demand for hydrogen in China will reach 37.15 million tons by 2030, accounting for about 5% of terminal energy consumption. By 2060, the annual demand for hydrogen in China will increase to around 130 million tons, accounting for approximately 20% of terminal energy consumption. Among them, hydrogen consumption in the industrial sector still accounts for the largest proportion, accounting for 60% of the total demand.
Industrial gas industry investment and financing: Beijing, Shanghai, and Jiangsu are among the top three regions in terms of financing events
Industrial gases belong to the typical "high-precision" industry, and their healthy and orderly development directly has an important impact on industries such as semiconductors and biomedicine. Venture capital, as an important supporting force for high-tech industries, is no exception for the industrial gas industry. More and more venture capital is beginning to invest in physical investment.
From the geographical distribution of financing events related to industrial gases, Beijing, Shanghai, and Jiangsu rank among the top with 6, 5, and 4 financing events respectively. From the perspective of regional distribution, it reflects the concentration of scientific research capabilities. Beijing has top-notch scientific research resources, while Shanghai and Jiangsu not only have scientific research capabilities, but also strong production and manufacturing capabilities.
From the distribution of rounds, strategic investment, Series A, and Pre-A rounds rank among the top, with 5, 4, and 3 financing events respectively. Unlike other industries where early investments dominate, industrial gas financing is primarily focused on strategic investments. Due to the strategic investment focus on synergistic value and long-term returns, this investment move further demonstrates the confidence of relevant institutions in the development of the enterprise.
Analysis of Industrial Gas Patents: Utility Models Ranked First
The domestic market for industrial gases developed relatively late compared to foreign markets, but it has developed rapidly under the influence of national policies, foreign investment introduction, and high-tech development. The number of related patent applications has also gradually increased, and the significant enhancement of technological strength has laid a solid foundation for the development of the domestic market and the rapid popularization of commercial products.
According to Tianyancha patent data, as of now, there are over 1400 patent applications related to industrial gases;
From the time distribution of patent applications in the past five years, 2021 ranked among the top with over 240 patent applications, followed by 2022 with over 210 patent applications; As of November 2023, the number of patent applications reached over 90.
In terms of the types of patents applied for industrial gases, utility models have over 940 patents, ranking first; Ranked second with over 450 invention patents; The design patent ranks third, with only over 10 patents.
Prospect analysis: Domestic substitution has broad prospects
There is great potential for market development. The market potential of China's industrial gas industry is enormous, with a significant increase in market share. It plays an important role in specific processes and equipment processing by reducing air pollution, balancing gas ratios, meeting specific production requirements as the main raw materials for production, assisting precision processing, and achieving energy conservation and emission reduction. With the continuous development of the Chinese economy, various industries have put forward higher requirements, thereby promoting the development of the industrial gas industry. The development space of China's industrial gas industry will continue to grow.
Energy conservation, environmental protection, and technological upgrading release potential demand in the industry. With the increasingly prominent issues of energy shortage and environmental pollution, "energy conservation and emission reduction" are receiving high attention from the country and society. The traditional application fields of air separation gas, such as metallurgy, chemical industry, etc., as high energy consuming industries, require urgent innovation in production processes to reduce energy consumption. The improvement and upgrading of traditional industrial production processes have enabled the potential demand for air separation gas inventory market to be released on a large scale.
Diversified downstream industries expand industry space. The main new demand for industrial gases in the future will come from emerging industries such as new energy, new materials, electronics, semiconductors, environmental protection, and biopharmaceuticals. Thanks to the strong promotion of national industrial policies, the emerging industries mentioned above have achieved rapid development in recent years, with a sharp increase in demand for industrial gases, greatly expanding the development space of the industrial gas industry and smoothing out the demand fluctuations caused by the traditional industrial boom cycle.
Tianyancha Research Institute believes that the importance of industrial gases as the basic raw materials of modern industry cannot be overemphasized. In the context of independent innovation, it is even more necessary to strengthen the research and development of basic materials, build a strong manufacturing country, and establish a solid foundation.