Due to the government's increased regulation over key industries such as steel, electrolytic aluminum, and coal, the steel industry experienced a sharp slowdown in development, which directly impacted the gas separation equipment sector. For a period starting from 2003, the industry saw a decline in orders, with some previously signed contracts being canceled or delayed by clients. However, by the second half of 2004, the market began to show steady growth, and sales gradually improved. After this difficult phase, the gas separation equipment industry started exploring new markets and expanding its applications.
One major trend in the industry has been the move toward larger-scale equipment. Larger systems not only reduce capital investment and floor space but also significantly lower operational costs. For example, a single 50,000-grade air separation unit is more cost-effective than two 25,000-grade units in both purchase and maintenance. Additionally, the failure rate of two smaller units is roughly twice that of one large unit. Currently, the largest operating air separation plant globally is 100,000-grade, while domestic manufacturers have not yet reached that scale. However, with technological advancements, companies like Hangyang Group have begun to design and produce 50,000-grade units, breaking the foreign monopoly in this segment. Large-scale equipment offers lower per-unit investment, land use, and production costs compared to smaller units, making it a more efficient choice.
The main challenge in scaling up remains technological capability. In addition to this, the industry has expanded into the petrochemical sector. By 2003, the steel industry was still the primary user, accounting for about 70% of all installations. After macroeconomic controls in 2004, this market structure began to shift, and gas separation companies started entering the petrochemical field. In November 2004, Hangyang Oxygen Group’s independently developed 52,000-grade unit won a bid against imported equipment for Henan Zhongyuan Dahua and Kaifeng Air Distribution Company, marking a significant milestone. This not only ended the reliance on imported equipment in the petrochemical industry but also demonstrated that Chinese manufacturers had reached world-class standards, offering a strong price advantage over foreign alternatives.
Scaling up equipment is not just about size—it requires advanced process design, higher technical standards for individual components, and sophisticated DCS control systems. Large-scale projects have driven overall industry innovation, aligning with long-term technological development goals. The success of the 40,000-grade unit in Dezhou, Shandong, proved that Chinese firms have made great strides in full-system design, critical component manufacturing, and control technology. With global oil prices remaining high, the steel sector is expected to see limited growth during the "Eleventh Five-Year Plan" period, while investment in chemicals and petroleum will rise sharply. These sectors require large-scale, technologically advanced gas separation equipment. For instance, a coal liquefaction project producing 5 million tons annually would need 10 sets of 50,000- to 70,000-grade units. Technologically, it is expected that by 2005, domestic companies can reliably produce 50,000-grade units. By 2010, 70,000-grade systems designed and manufactured in China are expected to reach world-leading levels, meeting most domestic petrochemical needs.
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