Though the prices of LPG have come down, manufacturers of industrial gasses in the UAE are still retaining the prices. This is because they have not seen any drastic fall in demand, except from the construction-related fabrication sector where the demand for argon and other industrial gasses has fallen in the last couple of months.
Speaking to Emirates Business, Rahul Narain, General Manager at UAE industrial gas major, Sharjah Oxygen, said: "The economic slowdown has affected sectors such as steel, cement and construction. Production at industrial gas companies could be down by 10 to 15 per cent. However, our margins are not much affected because distribution costs and diesel prices have come down substantially. Our profit margin may be down by only about five per cent."
Commercially manufactured industrial gasses are used in industrial processes such as aluminum and steel making, oil refining and medical applications, fertiliser manufacturing and the food industry, mainly in carbonated drinks.
Industrial gasses are essential for almost all manufacturing. While large quantities of oxygen, nitrogen and argon are used in the steel and metal industry, shipyards and the automotive industry use acetylene, propane, mixtures of fuel gasses and oxygen for cutting and welding.
Liquid nitrogen is vital in recycling plastics, packaging and scrap tyres. Similarly, the chemical industry employs all major industrial gasses as raw materials. High-purity gasses are also used in microchip production.
Narain said Sharjah Oxygen is a major player in the industrial gas market, supplying industrial and bulk gasses such as oxygen, nitrogen, argon and carbon dioxide, as well as medical gasses such as medical oxygen, nitrous oxygen, medical gas mixture, ammonia and other imported gasses.
He said the major industrial gas companies in the UAE would not be affected by the marginal fall in demand, which they are trying to offset by reducing input costs. However, with new projects in the market moving slowly, about eight to 10 smaller units may face problems because their size would constrain the sustainability of their business given even a small squeeze in the market situation.
With 30 years of experience in industrial gas market, Sharjah Oxygen's clients range from small fabrication workshops to oil refineries, and from academic institutions to aviation industry.
Mozzam Shafiq, Sales Executive at Arabian Industrial Gasses Company, said the market is down by 10 to 15 per cent but the fall in demand has not affected his company's daily production because there was a already a huge shortage of industrial gasses in the market.
"Our market outside the construction field remains intact, especially in the food and beverages sector, and healthcare and aluminum manufacturing. Dubai Aluminum, a major client for argon, is going strong and has not cut its gas purchase from us. The slowdown is mainly in the fabrication sector that depends on the construction field," he said.