The global cylinder industry has witnessed a gradual shift from the type-I steel cylinders to an increased use of composite cylinders in various segments. Gradual shift of usage from the type II steel cylinders to type IV composite cylinders in transportation sector is the major driving force behind the growth of the market.
LPG Global Market Outlook
Lucintel, a leading global management consulting and market research firm, has analysed the global composite cylinders market by various segments and regions, and has come up with two comprehensive research reports that analyse the growth opportunities for the global composite cylinders market between 2011 and 2016, and another one that covers the period between 2014 and 2019.
According to the first report, the composites cylinder market is expected to grow at double digit rate in coming five years with focus on weight reduction and better performance. Over the next 5 years, composites cylinder market is estimated to grow at a CAGR (Compound Annual Growth Rate) of 13.8% and the end product market is expected to surpass $1.Bn by 2016.
Asia Pacific emerged as the leading consumer of LPG accounted for 35% of the global demand in 2011 and is also expected to be the fastest growing market at an estimated CAGR of 4.8% from 2012 to 2018. Meanwhile, North America and Europe together accounted for 38.9% of the global market in 2011.
By analysing the following period between 2014 and 2019, Lucintel’s research report reveals the whole world, including Asia Pacific, will be the witness of the highest growth during forecast period.
The global composite cylinders market is expected to grow at a CAGR of 10.7%, due to the increasing demand of composite cylinders in natural gas vehicles.
According to a new study by Grand View Research, the LPG global market is expected to reach USD291.42 billion by 2020 and also LPG demand for autofuel applications is expected to reach 29.11 million tons by 2020, growing at a CAGR of 4.3% from 2014 to 2020.
The global market for LPG was 261.60 million tons in 2013 and is expected to reach 356.98 million tons by 2020, growing at a CAGR of 4.1% from 2014 to 2020. Also LPG from non-associated gas is expected to be the fastest growing source of LPG at an estimated CAGR of 4.7% from 2014 to 2020. Environmental benefits of LPG, such as low carbon emissions and cost and operational benefits, is expected to drive market demand over the forecast period. However, fluctuations in crude oil prices and downstream derivatives, coupled with high transportation costs is expected to hinder LPG market growth.
In 2013 Asia Pacific continued its dominance in the global LPG market and accounted for 35.64% of total market volume. Asia Pacific, along with being the largest market is also expected to be the fastest growing market for LPG, at an estimated CAGR of 5.0% from 2014 to 2020.
The global demand for LPG derived from associated gas is expected to reach 83.28 million tons by 2018. Increasing development in Natural Gas Liquids (NGL) production in North America is expected to boost the LPG market.
Residential/commercial sector dominated the LPG market and accounted for 47% of total consumption in 2011. Growing use of LPG as a fuel in cooking and space heating is expected to drive the market over the next five years. It is also expected to be the fastest growing segment at a CAGR of 4.5% from 2012 to 2018.
Indeed, as reported by a research on the 37th volume of LPGASWIRE dated 7th April, Japan’s largest LPG supplier Astomos Energy sold a total of 3.52 million mt of LPG in the domestic market in 2014, down 7.1% from a year ago mainly because of reduced demand for power generation. The company’s LPG sales to power utilities reached 220,000 mt in fiscal year ended December 31, falling 67.2% from 670,000 mt in 2013. Astomos’ domestic LPG sales to households, industrial and city gas customers increased 5.1% year on year to 3.14 million mt in 2014.
Growth in auto gas demand in countries such as Turkey, South Korea and Poland are expected to contribute to its global demand. Petrochemical industry is expected to continue absorbing the price sensitive demand of LPG in the near future, owing to rapid petrochemicals capacity addition mainly in Middle East and Asia Pacific.
On the other hand, governments tries to play their part to increase the presence of LPG for domestic use.
As reported by the online magazine AllAfrica, the Ghana Minister for Petroleum, Emmanuel Armah-Kofi Buah, has launched the Rural LPG Promotion Programme with the distribution of 5,000 pieces of 6 kilogramme cylinders and cooking stoves at Axim in the Nzema East District of the Western Region.
The Rural LPG Promotion Programme was first launched at Garu-Tempane in the Upper East Region in November 2013, where 1,500 pieces of 6kg cylinders and cooking stoves were distributed on a pilot basis.
The roll-out of the programme was started in 2014 with the distribution of cylinders and cooking stoves in the Tano South, Ajumako-Enyan-Essiam, Tolon and Central Gonja districts. In all, 14,500 pieces of 6kg cylinders, cooking stoves and related accessories have been distributed in five low access districts so far.
The programme is expected to be intensified, and massive distribution exercises carried out in low access and low income rural areas nationwide in 2015 and beyond. Under the programme, the government distributes free cylinders, cooking stoves and all related accessories to beneficiaries in low access and low income areas in districts across the country.
The main goal of this new policy is to develop a safe and standard market based structure with the cylinder recirculation model as the basis for marketing domestic LPG, autos and other leg applications.
At the same time, as reported by the Daily News Egypt on the 26th of March 2015, Minister of Supply Khaled Hanafy announced the government formed a committee comprised of members from the ministries of supply, planning, and petroleum to put guidelines and controls on the distribution of home gas (LPG) cylinders on ration cards, similar to the system of bread distribution on the cards.
In UK the situation is different, this market has a lot of resistance to change and despite independent gas distributers are interested on composites as a way to compete with the leaders LPG distributers, at this stage there are not significant changes on the mater.
Most of these initiatives are align with Aburi Composites’ view, as they can help to improve energy consumption following strict high level standards.
In the light of the research reports which have analysed the growth opportunities for the global composite cylinders market, it is reasonably believed we will be witness to a massive change to composites over the next years, in order to make safer the LPG domestic use in particular, accounted as one of the main sector of its application.