Preparing for Supply Chain Disruptions in Industrial Gas Supply

The industrial gas supply chain has proven vulnerable in ways that weren’t fully appreciated until a series of shortages made them hard to ignore. Helium has experienced five major supply crises since 2006, each triggered by a different combination of geopolitical conflict, plant fires, sanctions, and logistics failures. Liquid oxygen tightened sharply during COVID-19 as medical demand surged while industrial production fell. Neon, a critical gas for semiconductor lithography, saw prices spike 500 percent following the Russian invasion of Ukraine, which disrupted production concentrated in that region.

The pattern across all of these events is consistent. Operations that had thought ahead, whether through deeper inventory, stronger supplier relationships, or alternative sourcing arrangements, weathered them significantly better than those that hadn’t.

Why Gas Supply Is Structurally Vulnerable

Most industrial gases are produced from a small number of geographic sources. Helium comes predominantly from the United States, Qatar, and Algeria, with Qatar alone accounting for roughly a third of global supply. Neon is produced primarily as a byproduct of steel manufacturing in Ukraine and Russia. Specialty gases for semiconductor manufacturing are often sourced from an even narrower set of producers.

That concentration means a single geopolitical event, a plant fire, or a logistics disruption can reshape available supply almost overnight. Helium containers have a buffer window of about 45 days before the product begins to escape through pressure release valves, which means a prolonged disruption in Qatar doesn’t take months to reach customers in the US. It takes weeks. By the time a shortage is publicly announced, the window for proactive response has already narrowed.

Inventory Strategy

Running lean on gas inventory carries operational risk that’s easy to underestimate when supply is flowing normally. For high-priority gases where a disruption would halt production, holding additional on-site inventory provides a buffer that buys time to find alternative sourcing or adjust production schedules.

Bulk liquid systems paired with remote monitoring make it easier to maintain a meaningful safety stock without the handling demands of a large cylinder inventory. Automatic replenishment triggered by consumption data keeps the buffer intact without requiring manual oversight.

Supplier Relationships and Allocation Priority

When major suppliers declare force majeure and implement allocation restrictions, which happened across four of the five largest helium suppliers simultaneously in 2022, customers with established long-term relationships and contract agreements tend to receive preferential treatment over spot buyers. Building a supply relationship that goes deeper than a transaction is one of the more direct ways a facility can protect its position during a shortage.

Understanding how your primary supplier sources each gas, where their production and inventory are concentrated, and what their contingency protocols look like gives procurement teams meaningful information for assessing their actual exposure before a disruption occurs.

Forge Forward with nexAir

Supply chain disruptions are part of the reality of working with industrial gases. nexAir’s distribution network and deep KnowHow™ across gas supply help customers build the kind of supply programs that hold up when markets tighten. Talk to your local nexAir team now about what your exposure looks like and Forge Forward with a supply strategy built for the long term.