When the World Overcomes the Pandemic-Driven Oxygen Shortages, Decarbonation May Emerge as a New Market Driver

IndexBox has just published a new report: 'World - Oxygen - Market Analysis, Forecast, Size, Trends And Insights'. Here is a summary of the report's key findings.

New waves of the epidemic and the overwhelming demand for oxygen in the healthcare sector have led to a scarcity of the product worldwide. Countries with severe shortages are diverting oxygen from the sectors of metallurgy and chemistry to healthcare, which reduces the productivity of the manufacturing industries. As the pandemic slows, the demand for medical oxygen will return to pre-crisis levels. In the post-pandemic period, the growing demand from the metallurgical and chemical industries will continue to shape market expansion. Decarbonization may emerge as a new market driver, with oxygen being used to produce synthesis gas from carbon dioxide.

Key Trends and Insights

During the spread of the third Covid wave, the world faces a shortage of medical oxygen. Particularly acute gas shortages are being observed in India, Russia, Brazil, Argentina, Iran, Colombia, Philippines, Thailand, Malaysia, Pakistan, Costa Rica, Ecuador, Indonesia, Burma, Bangladesh, Nepal, and various African nations. Due to insufficient domestic production, these countries will increase their imports of oxygen in the coming months, and the largest exporters of oxygen, such as Belgium, France, and Germany, will become the primary suppliers.

The gas shortage problem could affect the currently booming metallurgy industry where oxygen is used in the steel-making process. In Russia, authorities have made calls to reduce oxygen consumption in metallurgy and redirect the gas supply to hospitals. In India, the chemical industry has been facing increased scrutiny as the government has ordered oxygen to be directed solely for medical use. As a result, several chemical enterprises have been forced to cease production.

The demand from the medical industry is expected to act as a powerful driver in the expansion of the oxygen market over the next two years. Indonesia, China, India, the U.S., and the EU countries are actively increasing oxygen production. Should the pandemic wane due to the widespread vaccination and the formation of herd immunity, the demand for medical oxygen is expected to return to pre-crisis levels.

The global decarbonization policy will stimulate oxygen consumption in the chemicals industry to produce synthesis gas from carbon dioxide. Synthesis gas, also called syngas, serves as feedstock for the synthesis of hydrocarbons and their derivatives. In the process of synthesizing methanol, acetic acid, diesel fuel and many other important chemical products, synthesis gas obtained from CO2 can successfully replace petroleum feedstock and natural gas.

Besides the climate agenda, metallurgy and chemistry are to remain to buoy the global oxygen demand. In the coming years, the demand for metals is to continue growing on a post-pandemic recovery of the economies worldwide. New alternative energy facilities would also require metal to be built. Another impact for the market may come from the global aerospace industry, where oxygen is used as a fuel oxidizer in rocket engines. Space exploration programs and the rapid development of private space companies will drive the growth of oxygen demand in this segment.

Given those prerequisites, the global oxygen market is expected to expand rapidly in the next few years and then to continue more moderate but steady growth. By the end of 2030, the global oxygen market is forecast to exceed $53B.

Global Oxygen Consumption

The global oxygen market stood at $32.6B in 2020. This figure reflects the total revenues of producers and importers (excluding logistics costs, indirect taxes and intermediaries' margins, which will be included in the final price). Hereinafter in the article, all figures refer to oxygen sold as a commercial product and don't include volumes produced on-site for own consumption within an enterprise.

In value terms, China ($8.7B) led the market, alone. The second position in the ranking was occupied by Russia ($3.6B). It was followed by India ($2.9B).

Global Oxygen Exports

In value terms, oxygen exports shrank to $166M (IndexBox estimates) in 2020. In 2020, overseas shipments of oxygen decreased by -4% to 986M cubic meters. Over the period under review, total exports indicated a pronounced increase from 2007 to 2020: its volume increased at an average annual rate of +3.1% over the last thirteen years.

In 2020, Belgium (291M cubic meters), distantly followed by France (179M cubic meters), Austria (45M cubic meters), and Kuwait (45M cubic meters) were the main exporters of oxygen, together mixing up 57% of total exports. Germany (41M cubic meters), the U.S. (40M cubic meters), Poland (37M cubic meters), Portugal (33M cubic meters), the Czech Republic (32M cubic meters), the Netherlands (31M cubic meters), Italy (21M cubic meters), Croatia (20M cubic meters) and Singapore (16M cubic meters) followed a long way behind the leaders.

In value terms, the largest oxygen supplying countries worldwide were Belgium ($26M), France ($22M) and the U.S. ($12M), together comprising 36% of global exports. These countries were followed by Kuwait, Portugal, Germany, Italy, the Netherlands, Austria, the Czech Republic, Poland, Croatia and Singapore, which together accounted for a further 38%.

Therefore, the average oxygen export price stood at $0.2 per cubic meter in 2020 and remained relatively stable against the previous year. Prices varied noticeably by the country of origin; the country with the highest price was Italy ($0.4 per cubic meter), while Belgium ($0.1 per cubic meter) was amongst the lowest.

Source: IndexBox Market Intelligence Platform