News from the air separation industry, 20160910: The gas industry aims to make progress through supply-side reform

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The gas industry aims to achieve a leap forward through supply-side reforms. During the 13th Five-Year Plan period, China’s industrial gas sector will take **advancing supply-side structural reforms as an opportunity to pursue the strategies of \"reducing excess capacity, lowering costs, phasing out outdated practices, and strengthening weak links.\" This will help optimize the industry’s structure, enhance its core competitiveness, promote green transformation, and enable overall progress for the industry. 　　Du Jun, president of the China Industrial Gases Industry Association, said that with the rising demand in emerging application areas such as energy, environmental protection, healthcare, LED, photovoltaic solar energy, and liquid crystal panel manufacturing, China’s demand for gases will continue to grow significantly during the 13th Five-Year Plan period. The gas market is expected to maintain an annual growth rate of around 10%, with the market size reaching approximately 120 billion yuan by 2017. “During the 13th Five-Year Plan period, **efforts were made to advance supply-side structural reforms, creating a rare opportunity for China’s gas industry to reach a new level. 　　Du Jun believes that to take advantage of the supply-side reform for better development, the gas industry needs to focus its efforts on the strategies of \"reducing excess capacity, lowering costs, reducing debt, and improving efficiency.\" In terms of reducing overcapacity and inventory levels, it is necessary to avoid duplicate construction, phase out and retire outdated production capacities, and facilitate the effective reduction of excess capacity in the gas industry. Efforts should be focused on promoting mergers and reorganizations among traditional gas companies, optimizing the allocation of resources such as capital, technology, and talent, enhancing the industry’s concentration and competitiveness, and creating a number of large-scale gas enterprise groups with international competitiveness. In terms of cost reduction, it is necessary to improve production efficiency and management standards in order to lower production costs. At the same time, through industry collaboration, transaction costs can be reduced, giving gas companies more influence in their business operations and enabling them to access broader markets for gas applications. To address weaknesses, it is necessary to establish and improve an innovation system, strengthen independent research and development of products, enhance the level of production of high-end gases as well as the technological sophistication in the manufacturing of industrial gas equipment, as well as in analysis, testing, and logistics and storage. It is also important to study advanced management methods and gas application technologies from abroad in order to break free from the dilemma of homogeneous competition. 　　“Recently, the General Office of the State Council issued guiding principles for restructuring the petrochemical industry, promoting transformation, and enhancing efficiency. These principles call for improving the layout of the petrochemical industry and advancing the development of the seven major petrochemical industrial bases along the coast in an orderly manner, with new projects in oil refining, ethylene production, and aromatics being brought online within these industrial bases step by step. For the gas industry, it is necessary to follow these guidelines for park layout in order to achieve safe, green, and clustered development within the sector, as well as to optimize its industrial structure. ”Du Jun said, “In addition, the gas industry must also meet the requirements of the petrochemical industry to transform and upgrade traditional industries, and seek development opportunities from this process.” ”It is understood that in recent years, the industrial gas industry has established a series of science and technology innovation platforms, such as R&D centers for cryogenic insulating materials, R&D centers for low-temperature heat exchangers, R&D centers for gas application technologies, centers for the treatment of used gas cylinders and their contents, and centers for the research, development, and promotion of carbon dioxide applications in agriculture, thereby laying a foundation for the innovative development of this industry.