Sector-specific background

Gases industry

The global gases market grew at a slightly faster rate in the 2014 financial year than in 2013, although growth was less rapid than had been expected at the beginning of 2014. Different rates of growth were to be seen in each region and industry sector. The competitive situation among the leading international gases suppliers did not change significantly as the year progressed.

North America, Europe and Asia remain the largest sales markets. The fastest rate of growth in 2014 was once more in Asia.

The increase in demand in the global steel industry slowed in the course of the year. As in prior years, surplus capacity had an impact here. There was only slight growth to be seen in the market in Asia, especially in China. As in Europe, surplus capacity is becoming increasingly apparent. In addition, trends in this industry sector have been adversely affected by economic and political uncertainty in South America and in Eastern Europe.

Strong signs of growth were visible in 2014 in the metalworking industry. Aluminium manufacturers in particular benefited from the trend towards lighter components, such as those being used in the automotive industry.

The chemical and energy sector has expanded overall during the reporting period. The main driver of this expansion was investment in North America, which was higher than average due to lower prices for raw materials. China also saw further growth in this sector, although here the rate of investment in new chemical projects was lower than in 2013. In Europe, trends in this segment were rather modest.

Investment in new refinery projects took place in 2014 mainly in North America, driven by the exploitation of unconventional oil and gas reserves in this region. In Europe, as in Asia, refinery sites are increasingly being adapted to meet the rise in demand for diesel. In the Middle East, there is a move towards the construction of integrated refinery complexes which are able to produce higher-quality products. In South America and in the South Pacific region, some refinery sites are suffering from the impact of surplus capacity and are facing closure.

Manufacturing industry grew at a modest rate in 2014. Positive trends were to be seen in particular in the automotive and aerospace industries and in the building trade. Increasing investment in energy infrastructure is expected over the coming years, especially in the expansion of renewable energy.

In the glass industry, demand has been rising for years for applications which will reduce energy consumption and prevent emissions. This trend continued in 2014.

The market for semiconductors continued to grow during the reporting period, especially the market for memory chips used in mobile devices. Following the decline in demand for personal computers over the past few years, a slight recovery was once again to be seen in 2014.

Recently, the situation for LEDs has been continuing to improve. The market is benefiting from growing public awareness of lighting applications which are environmentally friendly and energy-efficient.

After years of declining sales revenue, the global solar cell industry again saw significant increases in the 2014 financial year. Demand worldwide was driven in particular by a rapid rate of growth in China, Japan and in the United States.

The performance of the food and beverage industry has also been relatively steady over the past year. The fastest rates of growth were to be seen in China, the USA and Brazil. Consistent consumer trends in this market include healthier eating, higher consumption of meat protein and more processed foods. At the same time, demand for convenience products continues to rise.

In the global healthcare market, the long-term growth drivers remained robust in 2014: a growing, ageing world population, an increase in chronic diseases such as asthma and COPD (chronic obstructive pulmonary disease), and a greater emphasis on patient care in settings other than hospitals and on disease prevention. At the same time, however, the healthcare sector is subject to increasing regulation and cost pressure.

Engineering business

The market environment in the international large-scale engineering business remained stable in 2014. The greatest investment activity was to be seen in the chemical and energy sector.

Air separation plants

Trends in the air separation plant market were significantly weaker in 2014 than in 2013. Intense competition and great downward pressure on prices were evident in this market, especially in China, due to the fact that the number of projects being awarded was limited. Demand in other regions was also relatively modest. However, Linde did succeed in winning some significant tenders. These include, for example, projects in Eastern Europe and in Germany.

Olefin plants

The process of structural change continued in the petrochemical industry. As a result of the exploitation of shale gas, investment in the United States in petrochemical projects based on natural gas increased once again. In the Middle East, on the other hand, the trend is towards investment in high-quality petrochemical products based on heavier feedstock such as naphtha. In Europe, existing naphtha crackers are increasingly being converted to ethane imported from the United States, especially on coastal sites.

Against this background, the overall market for olefin plants has continued to grow over the past year.

Natural gas plants

In 2014, global demand for natural gas treatment, processing and liquefaction plants rose once again. As a result of the continued exploitation of shale gas reserves, natural gas prices remained at a relatively low level. This gave rise to a large number of new projects based on natural gas, especially in North America.

Hydrogen and synthesis gas plants

The market for hydrogen and synthesis gas plants also benefited in 2014 from the fact that the feedstock natural gas is available in large quantities and at a low price, especially in North America.

In Russia, the market environment was characterised by steady demand from the refinery sector, whereas in China it was acid gas removal plants and processes which generated interest.

Overall, investment activity in this product segment did not reach the exceptionally dynamic level seen in 2013.