Merchant Hydrogen Market Forecast (2022 - 2027)

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Merchant Hydrogen Market Forecast (2022 - 2027)

The merchant hydrogen market size is forecast to reach US$124 billion by 2027 after growing at a CAGR of 7.2% during 2022-2027.

The merchant hydrogen market size is forecast to reach US$124 billion by 2027 after growing at a CAGR of 7.2% during 2022-2027. Merchant hydrogen refers to the production of hydrogen in hydrogen production plants and selling it to several end-use industries for various industrial processes. Merchant hydrogen is extensively used in the oil and refinery industry in the manufacturing of gasoline, diesel, jet fuels, and various refining processes such as hydrocracking, hydrotreating, etc. The oil and refinery industry expanding globally and this will drive the growth of the market in the forecast period. For instance, according to the January 2020 data by the International Energy Agency, biofuel production is expected to increase fourfold from around 2 mboe/d in current times to almost 8 mboe/d by 2040. Furthermore, merchant hydrogen finds its broad uses in the production of various chemicals such as ammonia, methanol, cyclohexane, hydrogen peroxide, hydrochloric acid, etc. The chemical industry is booming globally and this will contribute to the growth of the market in the forecast period. For instance, according to the 2020 Chemical Industry Outlook Report by BASF, chemical production globally is expected to increase by 4.4% in 2021. The water electrolysis process is projected to witness the highest demand in the forecast period. Steam methane reforming will witness significant demand in the market. Lack of better infrastructure might hinder the growth of the market in the forecast period.

COVID-19 Impact

The merchant hydrogen market was moderately affected during the COVID-19 due to disruption in the supply chain and temporary shutdown of plants surfaced in the market. Market players implemented new work strategies to maintain a stable business operation. Despite executing new business strategy plans, businesses were affected due to the severity of the COVID-19 pandemic. As per the 2020 Annual Report by Air Products and Chemicals, Inc., operations were disrupted due to the pandemic, leading to reduced demand for industrial gas products in the company’s merchant business. The market witnessed decent demand towards the end of 2020. Going forward, the market is projected to have a positive growth rate owing to expansion in hydrogen production plants and increasing demand for hydrogen in end-use industries such as the oil and refinery industry, chemical industry, and automobile.

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Merchant Hydrogen Market Report Coverage

The report: “Merchant Hydrogen Market Forecast (2022-2027)”, by IndustryARC, covers an in-depth analysis of the following segments of the Merchant Hydrogen Industry.

By Process: Steam Methane Reforming, Water Electrolysis, Coal Gasification, Others

By End Use Industry: Oil and Refinery, Chemical, Food and Beverage, Construction, Residential, Commercial, Office, Hotels and Restaurants, Concert Halls and Museums, Educational Institutes, Automobile, Passenger Vehicle, Commercial Vehicle, Light Commercial Vehicle, Heavy Commercial Vehicle, Industrial, Electrical and Electronics, Agriculture, Paper, Others

By Geography: North America (USA, Canada, Mexico), Europe (UK, Germany, France, Italy, Netherlands, Spain, Russia, Belgium, Rest of Europe), Asia Pacific (China, Japan, India, South Korea, Australia, and New Zealand, Indonesia, Taiwan, Malaysia, Rest of Asia Pacific), South America (Brazil, Argentina, Colombia and Rest of South America), and RoW (Middle East and Africa).

Key Takeaways:

Water electrolysis is leading the merchant hydrogen market. This production process offers a robust option for carbon-free hydrogen production from renewable resources, making it a desirable choice among manufacturers.
The chemical industry will drive the growth of the market in the forecast period. According to the June 2020 data by the American Chemistry Council, net exports of chemicals will touch $37 billion by 2025.
The Asia-Pacific region will witness the highest demand for merchant hydrogen in the forecast period owing to the expanding oil and refinery industry in the region. According to the data by India Brand Equity Foundation, oil demand in India is expected to witness a 2x growth to reach 11 million barrels by 2045.

Merchant Hydrogen Market - By Process

Water electrolysis dominated the merchant hydrogen market in 2021. This process helps in the production of carbon-free hydrogen from nuclear and renewable resources. Water electrolysis is done with the help of a unit called an electrolyzer. Proton exchange membrane (PEM) electrolyzer and alkaline electrolyzer are the two types of electrolyzers usually implemented. Water electrolysis involving electrolyzers is considered a mature technology compared to other processes. Owing to such diverse properties, market players are engaging in expanding the portfolio of water electrolysis in the market. For instance, in January 2021 Cummins Inc., installed a new 20-megawatt PEM electrolyzer system in Canada to generate green hydrogen. This is the world’s largest proton exchange membrane electrolyzer in operation. Such developments in the water electrolysis process will increase its demand in the forecast period. The steam methane reforming process is projected to witness significant demand in the market.

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Merchant Hydrogen Market - By End Use Industry

Oil and refinery dominated the merchant hydrogen market in 2021 and is growing at a CAGR of 7.5% in the forecast period. Merchant hydrogen produced through processes such as steam methane reforming and water electrolysis is massively used in the production of high-quality lubricating oils and various refining processes in the oil and refinery industry. The oil and refinery industry expanding globally and this will lead to the growth of the market in the forecast period. For instance, as per the data by India Brand Equity Foundation, diesel demand in India is expected to double to 163 MT by 2029-30. Similarly, according to the December 2021 report by Energy Information Administration (EIA), total production of crude oil stood at 11.7 million b/d in November which is projected to touch an average of 12.1 million b/d in the fourth quarter of 2022. Such massive growth in the oil and refinery industry will increase the higher implementation of merchant hydrogen in the forecast period and this will contribute to the growth of the market in the forecast period. The chemical industry will drive the growth of the market significantly in the forecast period.

Merchant Hydrogen Market - By Geography

The Asia-Pacific region held the largest market share in the merchant hydrogen market in 2021 with a market share of up to 34%. The high demand for merchant hydrogen is attributed to the expanding oil and refinery industry in the region. For instance, as per the March 2021 report by Energy Information Administration (EIA), China’s refineries refined more crude oil for most of 2020 compared to US refineries. Similarly, as per the data by India Brand Equity Foundation, the Indian government has allowed 100% Foreign Direct Investment in upstream and private sector refining projects. Such increasing growth in the region’s oil and refinery industry will stimulate the higher uses of merchant hydrogen in the forecast period. The North American region is projected to witness significant demand for merchant hydrogen in the forecast period.

Merchant Hydrogen Market Drivers

The booming chemical industry will drive the growth of the market

Merchant hydrogen is deeply associated with the chemical industry as it is implemented in the production of several chemicals such as ammonia, methanol, cyclohexane, hydrogen peroxide, among others. The chemical industry is booming globally and this will contribute to the growth of the market in the forecast period. For instance, according to the June 2021 Mid-Year US Chemical Industry Outlook report, chemical volumes and shipments in the US are expected to increase by 3.2% and 8.2% respectively in 2022. Similarly, according to the report by India Brand Equity Foundation (IBEF), the domestic chemical sector's small and medium enterprises are projected to witness 18-23% revenue growth in FY22. This huge growth in the global chemical industry will increase the higher uses of merchant hydrogen and this, in turn, will contribute to the market’s growth in the forecast period.

Expanding oil and refinery industry will contribute to market’s growth

Merchant hydrogen is massively used in the oil and gas industry. Processes such as steam methane reforming and water electrolysis are implanted for the production of merchant hydrogen which is later used in the oil and refinery industry for the production of gasoline, diesel, jet fuels, and various high-quality lubricating oils. The oil and gas industry expanding globally and this will drive the growth of the market. For instance, as per the data by India Brand Equity Foundation, the oil and gas sector’s installed provisional refinery capacity accounted for 246.90 MMT as of September 2021 and Indian Oil Corporation was the largest domestic refiner with a capacity of 69.7 MMT. Similarly, according to the statistics by the International Energy Agency, global refining activity is expected to jump by 2.4 mb/d in 2022, and demand for oil will return to pre-pandemic levels by the end of 2022. Such massive expansion in the oil and refinery industry globally will augment the higher uses of merchant hydrogen and this will drive the growth in the forecast period.

Merchant Hydrogen Market Challenges

Lack of better infrastructure might hamper the market’s growth

The infrastructure barrier has been a key challenge in the merchant hydrogen and this might hinder the market’s growth in the forecast period. The distribution and storage of merchant hydrogen are limited and vary, restricting its widespread adoption. For instance, as per the June 2019 report by Energy Information Administration, better planning and coordination are required among government and industries for the proper delivery and storage of merchant hydrogen. Similarly, as per the August 2021 data by the Department for Business, Energy, and Industrial Strategy of the UK, better coordination is required for the wider rollout of hydrogen. Such infrastructure concerns associated with merchant hydrogen might limit the market’s growth.

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Merchant Hydrogen Industry Outlook

Investment in R&D activities, acquisitions, product and technology launches are key strategies adopted by players in the merchant hydrogen market. Major players in the merchant hydrogen market are:

Airgas, Inc.
Air Products and Chemicals, Inc.
Praxair, Inc.
Linde plc
Air Liquide
Uniper
Engie SA
FuelCell Energy, Inc.
Cummins Inc.
Others

Recent Developments

In May 2020, Engie collaborated with Neste to produce renewable hydrogen on a large scale for the production of high-quality biofuels. Such collaborations will contribute to the growth of the market in the forecast period.