Indonesia Industrial Gases Market Size, Share, Trend & Insight

The Indonesia Industrial Gases Market Size has witnessed robust growth in recent years, driven by the rapid industrialization and growing demand across various sectors such as manufacturing, healthcare, food and beverages, and electronics. In 2021, the market attained a value of nearly USD 7.30 billion and is expected to grow at a CAGR of 5.1% between 2024 and 2032, reaching approximately USD 9.87 billion by 2027. This article delves into the market’s key benefits, developments, drivers, challenges, trends, and outlook, offering a holistic view of this thriving sector.

Key Benefits of Industrial Gases

Industrial gases play a crucial role across diverse industries in Indonesia, offering the following benefits:

1. Increased Efficiency in Manufacturing: Industrial gases such as oxygen, nitrogen, and argon are used extensively in the steel and chemical industries to optimize production processes. They help improve energy efficiency, reduce emissions, and enhance product quality.
2. Critical Role in Healthcare: Gases like oxygen and nitrous oxide are indispensable in the healthcare sector. Oxygen is used in hospitals for respiratory therapy, while nitrous oxide is used for anesthesia. During the COVID-19 pandemic, demand for medical-grade oxygen surged, highlighting its critical importance in healthcare.
3. Food Preservation: Gases like nitrogen are employed in the food and beverage industry for food packaging and preservation. Modified atmosphere packaging (MAP) with nitrogen helps extend the shelf life of perishable goods, ensuring better product quality for consumers.
4. Boosting Semiconductor Manufacturing: With the growth of Indonesia’s electronics industry, gases like nitrogen and argon are used in semiconductor manufacturing, aiding in wafer production and other essential processes.
5. Environmental Benefits: Industrial gases such as hydrogen are playing an increasingly important role in reducing carbon emissions, especially in sectors like energy and transportation. The shift towards cleaner fuel solutions creates a significant opportunity for industrial gases in Indonesia’s green energy initiatives.

Key Industry Developments

1. Rising Investment in Infrastructure: The Indonesian government’s focus on infrastructure development has led to increased demand for industrial gases in sectors such as construction, metal fabrication, and power generation. This is expected to fuel market growth in the coming years.
2. Expanding Healthcare Sector: The Indonesian healthcare sector has been expanding due to increased government spending and private investments. This has significantly boosted the demand for medical gases, such as oxygen and nitrous oxide, further driving market growth.
3. Technological Advancements: Companies in the industrial gases market are investing in technologies such as gasification and advanced cryogenic solutions to enhance production capabilities. These innovations are aimed at improving efficiency and reducing costs, thus boosting competitiveness.
4. Emergence of Hydrogen Economy: Indonesia has shown interest in developing its hydrogen economy, particularly in reducing carbon emissions and meeting sustainability goals. This presents new growth avenues for the industrial gases market, with hydrogen being a key element in energy transition strategies.

Driving Factors

1. Growing Industrialization: Indonesia’s continued industrialization, particularly in sectors like chemicals, metallurgy, and manufacturing, is driving the demand for industrial gases. These sectors rely on gases such as oxygen, nitrogen, and argon for various processes, which supports market growth.
2. Increasing Demand for Healthcare: The growing demand for healthcare services in Indonesia, especially after the COVID-19 pandemic, has surged the need for medical gases like oxygen. The expansion of hospitals and medical facilities is further driving market growth.
3. Rising Environmental Concerns: The global focus on reducing carbon emissions and promoting clean energy has increased the adoption of hydrogen and other environmentally friendly gases. Indonesia’s push towards sustainability is expected to create opportunities for industrial gases that aid in cleaner production and energy-efficient processes.
4. Infrastructure Development: Indonesia’s ambitious infrastructure projects, including the construction of new roads, bridges, and power plants, are creating additional demand for industrial gases, particularly in welding, metal fabrication, and cooling processes.

COVID-19 Impact

The COVID-19 pandemic significantly impacted the Indonesia industrial gases market, particularly in the healthcare sector. The unprecedented demand for medical-grade oxygen during the pandemic revealed the critical role of industrial gases in saving lives. This demand surged as hospitals struggled to provide respiratory support to COVID-19 patients.

While other sectors experienced slowdowns due to lockdowns and restrictions, the healthcare sector’s demand for gases, particularly oxygen, increased dramatically. The pandemic also highlighted the need for better infrastructure in terms of gas supply chains, prompting companies to expand their production capacities to ensure they could meet surging demand in the future.

Restraining Factors

1. High Production Costs: The production of industrial gases is energy-intensive and requires significant investment in specialized equipment, such as cryogenic plants. High production costs and fluctuating energy prices can impact profitability for gas manufacturers.
2. Logistical Challenges: Transportation and storage of industrial gases are challenging due to their hazardous nature. The need for specialized containers and transportation solutions increases operational costs, which can hinder market growth, particularly in remote or underdeveloped regions.
3. Regulatory Barriers: Strict regulations surrounding the production, storage, and transportation of industrial gases can pose challenges for manufacturers. Compliance with environmental and safety standards increases operational complexities and costs.

Market Segmentation

The Indonesia industrial gases market can be segmented based on gas type, end-use industry, and application:

By Gas Type

1. Oxygen
2. Nitrogen
3. Argon
4. Hydrogen
5. Carbon Dioxide
6. Others

By End-Use Industry

1. Healthcare
2. Manufacturing
3. Food and Beverage
4. Electronics
5. Chemicals
6. Energy
7. Metal Fabrication

By Application

1. Welding and Cutting
2. Cooling and Freezing
3. Food Packaging
4. Medical Applications
5. Power Generation
6. Semiconductor Manufacturing

Market Outlook

The Indonesia industrial gases market is expected to grow steadily over the forecast period, driven by the country’s expanding industrial base, rising demand for healthcare services, and increasing focus on clean energy solutions. The government’s initiatives to support industrial growth and infrastructure development will further fuel demand for industrial gases across various sectors.

The growing awareness of environmental sustainability and the push for cleaner energy sources, such as hydrogen, are also expected to create new opportunities for market players. However, challenges such as high production costs, logistical hurdles, and regulatory complexities may impede the market’s growth to some extent.

Market Overview and Trends

Key Trends:

1. Sustainability Focus: The growing emphasis on reducing carbon footprints and adopting cleaner energy sources is expected to increase demand for hydrogen and other eco-friendly gases.
2. Technological Advancements: Innovations in gas production and storage technologies, such as gasification and advanced cryogenic solutions, are improving efficiency and reducing costs for manufacturers.
3. Expansion of Healthcare Sector: The increasing healthcare needs of Indonesia’s population, coupled with government investments in medical infrastructure, are expected to drive continued demand for medical gases.
4. Growing Demand in Electronics: The rise in semiconductor manufacturing in Indonesia, driven by the global demand for electronics, is boosting the need for industrial gases like nitrogen and argon.

Regional Analysis/Insights

Java

Java remains the economic hub of Indonesia, accounting for the largest share of the industrial gases market. The island’s significant industrial activity, including the manufacturing and electronics sectors, fuels demand for industrial gases.

Sumatra

Sumatra is emerging as a key region due to its increasing industrialization and investments in infrastructure development. The demand for industrial gases in the region is expected to grow steadily over the forecast period.

Kalimantan and Eastern Indonesia

Although these regions have smaller industrial bases compared to Java, they are witnessing rising demand for industrial gases in sectors such as energy and manufacturing. The development of new industrial zones is expected to drive future market growth in these areas.

Major Key Players

1. L’Air Liquide S.A. (Air Liquide)
2. Linde plc
3. Pt. Tira Austenite Tbk
4. PT Aneka Gas Industri Tbk
5. Air Products and Chemicals, Inc.
6. Others

Opportunities

1. Expansion into New Regions: As industrialization spreads to regions beyond Java, companies can capitalize on the untapped potential in areas such as Sumatra and Eastern Indonesia.
2. Hydrogen Economy: The growing interest in hydrogen as a clean energy source presents new growth opportunities for industrial gas producers.
3. Healthcare Sector: Expanding healthcare infrastructure and increasing demand for medical gases provide opportunities for market players to enhance their presence in the healthcare segment.

Challenges

1. High Capital Investment: Establishing and maintaining cryogenic gas production facilities requires significant investment, which can be a barrier for new entrants.
2. Complex Logistics: The transportation and storage of industrial gases require specialized infrastructure, leading to higher operational costs and logistical challenges.