Air Separation Unit Market

Market Overview

The global air separation unit market size was valued at USD 5.32 billion in 2022. It is estimated to reach USD 7.98 billion by 2031, growing at a CAGR of 4.62% during the forecast period (2023–2031). The global air separation unit market is largely boosted by the surging demand for air separation units from primary end-users like iron and steel, petrochemicals, chemicals, and healthcare. Moreover, energy production and consumption, especially of oil, is growing worldwide, fueling market expansion.

An air separation unit splits atmospheric air into its primary constituents, typically nitrogen and oxygen, but also argon and other rare inert gases. Fractional distillation is the most prevalent method of air separation. Cryogenic air separation units (ASUs) are designed to produce nitrogen or oxygen, and frequently argon. Other methods, like pressure swing adsorption (PSA), membrane, and vacuum pressure swing adsorption (VPSA), are utilized commercially to separate a single component from normal air.

Cryogenic distillation is required to produce high-purity oxygen, nitrogen, and argon for the fabrication of semiconductor devices. Likewise, the only viable source of the rare gases krypton, neon, and xenon is air distillation with at least two distillation columns. Helium is also recovered via advanced air separation techniques.

Market Dynamics

Global Air Separation Unit Market Drivers

Growing Demand for Industrial Gases

Improvement in the global economy is resulting in the expansion of various businesses (particularly in developing economies, like Asia-Pacific), coupled with the need for better, efficient, and sustainable processes across industries, like refineries, fertilizer industry, steel, food and beverages, and chemical industries, etc. There has also been an increase in energy demand across the world. In 2021, the primary energy consumption amounted to 595.15 exajoules, an increase of approximately 15% from 2012.

Industries like iron and steel, petrochemicals, chemicals, and healthcare, along with the oil and gas sector, are the major end users of gases produced from air separation units. ASUs have supplemented the demand for industrial gases, such as oxygen and nitrogen, in the past few years. The need to install ASUs—which split atmospheric air into its constituent industrial gases, like nitrogen and oxygen—to supply the growing demand for industrial gas is predicted to persist. These factors drive the market growth.

Increasing Energy (Oil) Production and Consumption

The world's oil production was 89,877 thousand barrels per day in 2021, up almost 7% from 2011. The oil refining capacity was recorded at 79,229 thousand barrels daily in 2021. The enhanced performance of the oil and gas industry, which includes applications such as enhanced oil recovery (EOR), nitrogen blanketing and pipeline cleaning, refinery, and petrochemical, all of which require extensive use of industrial gases, is expected to result in significant increasing the demand for ASUs.

Similarly, to process and transport the pumped-out oil and gas to the end users, the construction of new LNG terminals, refineries, and petrochemical plants. For instance, in June 2022, the government of Tanzania signed an agreement with the United Kingdom's Shell and Norway's Equinor companies to construct a USD 40 million LNG export terminal. Such plants are expected to increase, resulting in an increased demand for ASUs for the supply of industrial gases in the coming years.

Global Air Separation Unit Market Restraint

Associated Technical and Cost Challenges

The separation of air into its components is an energy-intensive process. Cryogenic distillation-based air separation is widely recognized for consistently producing high-purity oxygen and other industrial gases in various applications. However, it is important to note that this method is often seen as expensive and requires significant energy consumption in many sectors of the economy. The ASU can account for up to 15% of the total cost of several processes, like the capital cost of a gasification plant. It also consumes a substantial amount of power within the plant. Such factors limit the market's growth.

Global Air Separation Unit Market Opportunities

Strategic Initiatives by Key Players

Leading market participants have been concentrating on introducing new products with enhanced capabilities. For instance, air separators have been developed for pharmaceutical powder with a particle size of 45 microns. Expansions, acquisitions, and partnerships are the primary growth strategies the major players employ to expand their businesses in the potential markets. For instance, Air Products and its regional partner Saudi Arabian Refrigerant Gases Company of Saudi Arabia (SARGAS) announced in March 2022 that they had signed an agreement to construct a new ASU at the Jindal Shadeed Iron & Steel facility in Sohar, Oman. The new unit will supply the facility with over 400 T/D of nitrogen and oxygen. Such developments are expected to create opportunities for market growth.

Regional Analysis

Asia-Pacific Dominates the Global Market

Based on region, the global air separation unit market is bifurcated into North America, Europe, Asia-Pacific, South America, and the Middle East and Africa.

Asia-Pacific is the most significant global air separation unit market shareholder and is anticipated to exhibit a CAGR of 5.16% during the forecast period. Asia-Pacific is one of the fastest-growing regions in the world, owing to the presence of emerging nations, like India and China, and developed countries, such as Japan, South Korea, and Australia. Rapid growth in energy-intensive industries in the region, mainly in China, India, and Southeast Asia, due to the presence of an extensive range of industrial units, such as manufacturing facilities, refineries, and smelters, which resulted in the extensive demand for air separator units are expected to drive the market in the region. In this region, new refineries have been built, while existing refineries have been upgraded and expanded in capacity. For instance, in May 2022, China-based Suzhou Oxygen Plant Co. Ltd (SOPC) announced the launch of a new nitrogen plant that will likely produce high-purity nitrogen and high-purity liquid oxygen (LOx) to supply critical gases for China's semiconductor industry. The plant will likely produce 8000 Nm3/h high-purity nitrogen and 140 Nm3/h high-purity LOx, in addition to meeting specified flow rates and purity levels. Thus, such upcoming air separation units will likely drive the market during the forecast period.

North America is expected to expand substantially over the forecast period. The North American region is marked by a wide range of industrial units, such as manufacturing facilities, refineries, and smelters, with a significant demand for Air Separator Units. Similarly, the North American region is a net oil exporter globally. The region has been actively utilizing techniques, such as Enhanced Oil Recovery (EOR), to pump out a greater volume of oil and gas, requiring extensive industrial gas use. This, in turn, is expected to supplement the demand for air separation units in the North American region. In addition, the expansion of the North American region's oil and gas downstream sector is expected to positively impact the demand for air separation units during the forecast period. In 2021, the crude oil production in the U.S. was 11.18 million barrels per day, though slightly lower compared to 11.28 million barrels per day in 2020 but significantly higher than the oil production at 9.44 million barrels per day in 2015. Such factors boost the regional market growth.

Europe is a hub for manufacturing and chemical industries and is home to many automotive manufacturing companies like Volkswagen Group, BMW, etc. Automotive production requires industrial gases, such as nitrogen, argon, oxygen, and carbon dioxide, for welding and metal fabrication. The growth of the chemical and pharmaceutical industry in Europe in countries like Germany, Italy, France, etc., has been the major driver for the region's air separation units (ASU) market. In Europe, Germany is the biggest market for industrial gases. The European Union has allocated between 20 and 35 percent of its budget to infrastructure. In the coming years, the demand for air separation units is anticipated to continue to surge due to the rise in infrastructure development expenditures, fueling the growth of industrial gas demand.

South America has a vast territory, rich natural resources, rapidly increasing consumption capacity, market potential, and increased investment and trade opportunities. In the region, Brazil and Argentina are the fastest-growing economies. Mining is a leading industry in South America, as the region has an abundance of precious and non-ferrous metals. Furthermore, in South America, the manufacturing sector is the fastest-growing, and steel, automobiles, chemicals, rubber, electrical appliances, metal products, and machinery and equipment manufacturing. All these industries require high purity of industrial gas for various processes, which, in turn, is expected to boost the demand for air separation units in the region.

Segmental Analysis

The global air separation unit market is segmented by process, gas, and end-user.

Based on the process, the global air separation unit market is bifurcated into cryogenic distillation and non-cryogenic distillation. 

The cryogenic distillation process segment dominates the global market and is expected to expand substantially over the forecast period. Cryogenic separation is a commercial process that occurs at very low temperatures where feed gas components start to liquefy. The process is generally used in medium to large-scale plants to produce nitrogen, oxygen, and argon as gases or liquid products. The industries with complex processes, such as the refinery, steel, and manufacturing industries, will likely hold the most prominent demand for cryogenic distillation-based air separation units throughout the forecast period, owing to their continuous need for highly pure industrial gases. For example, in refineries, nitrogen is one of the vital industrial gases used for various process steps, from purging and drying to pigging and pressure testing.

Non-cryogenic air separation processes are near ambient temperature separation processes and are used to produce either nitrogen or oxygen as gases. This process is commonly used when there is no requirement for high-purity nitrogen or oxygen (e.g., to produce 98 to 99.5% oxygen-free nitrogen or oxygen at about 93% purity) and when product demand is relatively low. The non-cryogenic separation process is cost-effective when the gas demand is relatively small (tens of tons per day) and very high product purity is not a critical requirement. It produces lower-purity gases at a reduced rate compared to a cryogenic process.

Based on gas, the global air separation unit market is divided into nitrogen, oxygen, argon, and other gases. 

The nitrogen segment is the largest revenue contributor to the market and is expected to exhibit a CAGR of 4.69% over the forecast period. Nitrogen is one of the most basic and abundant elements. The Nitrogen Separation Membrane technology utilizes a membrane composed of several hollow fibers through which compressed air is directed. The permeability of gas molecules varies throughout the walls of each fiber, with certain molecules exhibiting higher rates of diffusion than others. The fast gases such as oxygen, carbon dioxide, and water vapor are passed through the fiber walls and are exhausted into the atmosphere. In contrast, slow gas nitrogen passes through the fiber wall slower, producing high-purity nitrogen at the membrane outlet.

Oxygen is an essential medicine required at all levels, directly aiding the demand for oxygen air separation units. In June 2022, Air Liquide announced that it would install an air separation unit in Uttar Pradesh, India, which has a capacity of 350 tons per day of gas like oxygen, nitrogen, hydrogen, argon, and carbon monoxide is likely to be commissioned by the end of 2023. The plant is being installed to fulfill the nation's oxygen demand for medical and industrial purposes. Such developments are expected to drive segment growth.

Based on end-users, the global air separation unit market is segmented into the chemical industry, oil and gas industry, iron and steel industry, and other end-users. 

The iron and steel industry segment owns the highest market share and is estimated to exhibit a CAGR of 4.83% during the forecast period. The iron and steel industry is one of the major consumers of ASUs, as steel production requires massive amounts of oxygen, most of which is sourced from the air using ASU technology. It is estimated that more than half of the global steel production uses the basic oxygen process (BOP), which utilizes pure oxygen to convert a charge of liquid blast furnace iron and scrap into steel. Hence, most steel plants install large ASUs to cater to the oxygen demand, which forms a critical part of plant operations.

The chemical industry is one of the primary end-user segments contributing to the demand for air separation units. ASUs find widespread usage in chemical industries manufacturing fertilizers and pure gases such as medical oxygen, inert gases, and coal gasification. One of the primary aspects boosting the demand for ASUs in the chemical industry is the rising demand for fertilizers, especially nitrogenous fertilizers. According to the International Fertilizer Organization, during 2020/21, the global demand for fertilizers stood at 198.1 million metric tonnes, of which nearly 110 million metric tonnes (55.5%) came from nitrogenous fertilizers.

Recent Developments

• May 2023- Inox Air and Tata Steel entered into a contractual arrangement for the establishment of two air separation units (ASU) with a production capacity of 1,800 tons of oxygen, nitrogen, and many other rare gases.
• August 2023- Linde announced that Indian Oil Corporation Ltd. (IOCL) issued a Letter of Acceptance (LoA) for the establishment of an Air Separation Unit (ASU) in Panipat.