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Merchant vs packaged gases
What it is
Beyond on-site pipeline supply, gases reach customers as liquid delivered by cryogenic tanker into a customer's storage tank, or as compressed gas in cylinders. Merchant liquid serves mid-size industrial users; packaged cylinders serve small workshops, hospitals and laboratories
Realisation per unit rises sharply from pipeline to liquid to cylinder
Impact on industries
- Cylinder and merchant business earns far better margins per unit than tonnage supply, and serves a fragmented customer base with no single-buyer power
- Diversifies away from the concentrated counterparty risk of long-term on-site contracts
- Distribution economics dominate - delivery radius from the filling plant limits the addressable market, so the business is regional by physics
- Cylinder handling, testing and safety compliance add cost and liability that pipeline supply avoids