VOL. XCIV, NO. 247
★ WIDE MOAT STOCKS & COMPETITIVE ADVANTAGES ★
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Sunday, December 28, 2025
Air Products and Chemicals, Inc.
APD · New York Stock Exchange
Weighted average of segment moat scores, combining moat strength, durability, confidence, market structure, pricing power, and market share.
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Overview
Air Products and Chemicals, Inc. is a global industrial gases supplier (oxygen, nitrogen, argon, hydrogen, helium, and specialty gases) with a smaller cryogenic/gas-processing equipment business. The core moat is concentrated in on-site supply, where long-duration contracts tied to customer facilities support durable cash flows and create meaningful switching friction. Pipeline networks and the permits/rights needed to operate them reinforce local density advantages in key industrial corridors. Merchant gases benefit from distribution density and installed customer-site equipment, but competition is typically more price-driven due to shorter contracting. Equipment sales are a smaller, project-based business where differentiation is primarily execution and technical performance.
Primary segment
On-site industrial gases (incl. pipelines)
Market structure
Oligopoly
Market share
—
HHI: —
Coverage
3 segments · 6 tags
Updated 2025-12-27
Segments
On-site industrial gases (incl. pipelines)
On-site supply of industrial gases (oxygen, nitrogen, hydrogen, etc.)
Revenue
51.3%
Structure
Oligopoly
Pricing
strong
Share
—
Peers
Merchant gases (liquid bulk + packaged)
Merchant (bulk liquid and packaged) industrial gases distribution
Revenue
44.3%
Structure
Competitive
Pricing
moderate
Share
—
Peers
Industrial gases equipment (cryogenic & gas processing)
Industrial gas equipment (air separation, gas processing, helium/hydrogen transport & storage)
Revenue
4.3%
Structure
Competitive
Pricing
weak
Share
—
Peers
Moat Claims
On-site industrial gases (incl. pipelines)
On-site supply of industrial gases (oxygen, nitrogen, hydrogen, etc.)
Revenue share derived from FY2025 sales by supply mode (on-site total $6.18B of $12.04B).
Long Term Contracts
Demand
Long Term Contracts
Strength: 5/5 · Durability: durable · Confidence: 5/5 · 2 evidence
On-site plants are tied to customer facilities and typically run under multi-year contracts with fixed charges/minimums and escalation provisions, creating high switching friction and contracted cash flows.
Erosion risks
- Customer plant closures or demand destruction in refining/chemicals
- Aggressive repricing at contract renewals
- New competing capacity built alongside new customer projects
Leading indicators
- Remaining performance obligations (backlog) trend disclosed in filings
- Average contract duration / renewal win rate on large projects
- Plant reliability and uptime (outage frequency)
Counterarguments
- At renewal, customers can rebid long-term contracts and pressure margins
- New plants are often competitively bid at the project stage, limiting supernormal returns
Permits Rights Of Way
Legal
Permits Rights Of Way
Strength: 4/5 · Durability: durable · Confidence: 4/5 · 1 evidence
Pipeline networks require rights/permits and provide advantaged, reliable supply near industrial clusters; replicating networks is slow and capital-intensive.
Erosion risks
- Regulatory tightening for new pipeline approvals
- Industrial demand shifts away from served clusters
- A competitor wins anchor customers for a new local network
Leading indicators
- Pipeline utilization rates and new pipeline tie-ins
- Permitting activity for competitor pipeline projects in key corridors
- Local large-project announcements (refineries, chemicals, steel) near existing networks
Counterarguments
- In many locations, on-site plants can substitute for pipelines, limiting the network edge
- Other global incumbents can also build pipelines when demand is large enough
Capex Knowhow Scale
Supply
Capex Knowhow Scale
Strength: 4/5 · Durability: durable · Confidence: 4/5 · 1 evidence
Engineering, safety, and operating know-how for large air-separation, hydrogen, and related plants lowers execution risk; incumbents can bid/finance mega-projects more credibly than smaller entrants.
Erosion risks
- Technology diffusion (standardized plant designs) reduces differentiation
- Project execution missteps damage reputation and bidding ability
- Higher cost of capital relative to peers reduces bid competitiveness
Leading indicators
- Project cost overruns / schedule delays disclosed in filings
- Safety incidents and unplanned outage frequency
- Net debt / EBITDA and credit spreads vs peers
Counterarguments
- Other global majors have similar engineering depth and scale, so the advantage may be shared rather than unique
- Customers can choose self-supply or integrate gases into EPC contracts
Merchant gases (liquid bulk + packaged)
Merchant (bulk liquid and packaged) industrial gases distribution
Revenue share derived from FY2025 sales by supply mode (merchant total $5.34B of $12.04B).
Physical Network Density
Supply
Physical Network Density
Strength: 3/5 · Durability: medium · Confidence: 4/5 · 1 evidence
Dense local production + logistics + inventory positioning improves delivery economics and service levels, especially for bulk liquids and frequent-delivery packaged gases.
Erosion risks
- Local/regional distributors expand into core corridors
- Commoditization of bulk atmospheric gases drives price-led switching
- Higher diesel/freight costs reduce delivery advantage
Leading indicators
- Cylinder/liquid bulk volume trends and churn
- Route density (deliveries per mile) and logistics cost per unit
- Competitor branch openings / acquisitions in key metros
Counterarguments
- Contracts are typically shorter and can be competitively rebid
- Many customers can dual-source merchant gases, limiting pricing
Installed Base Consumables
Demand
Installed Base Consumables
Strength: 3/5 · Durability: medium · Confidence: 3/5 · 1 evidence
Bulk storage/vaporization equipment and cylinder/dewar programs create some operational inertia and recurring refill behavior, but switching is feasible for many accounts.
Erosion risks
- Standardized tanks/cylinders reduce switching friction
- Aggressive price competition from regional suppliers
- Customers insource with small on-site generators for select gases
Leading indicators
- Retention/churn in packaged gases (cylinders/dewars)
- Share of wallet in multi-site customers
- Installed base growth (new bulk tanks placed)
Counterarguments
- For many customers, switching suppliers is mostly administrative and price-driven
- Bulk tank assets can be replaced or reconfigured, weakening lock-in
Industrial gases equipment (cryogenic & gas processing)
Industrial gas equipment (air separation, gas processing, helium/hydrogen transport & storage)
Revenue share derived from FY2025 sales by supply mode (sale of equipment total $0.52B of $12.04B).
Operational Excellence
Supply
Operational Excellence
Strength: 3/5 · Durability: medium · Confidence: 3/5 · 1 evidence
Differentiation is mainly execution and performance (efficiency, guarantees, service/know-how) rather than structural barriers; projects are competitively bid.
Erosion risks
- Price-led competition compresses margins on project bids
- Subcontractor constraints or quality issues impair delivery
- Loss of key engineering talent
Leading indicators
- Order intake / backlog for equipment (if disclosed)
- Project margin trends and warranty/claim frequency
- Delivery timeliness vs contracted schedules
Counterarguments
- Equipment is a more standard competitive manufacturing market with limited switching costs
- Large industrial gas majors can internalize engineering or source from multiple vendors
Evidence
long-term contracts ranging from 15- to 20-years
The filing describes typical on-site contract duration, supporting the contracted-revenue moat for this supply mode.
The filing discloses significant remaining performance obligations tied to fixed-charge provisions for on-site supply, consistent with long-duration contract backlogs.
Risks & Indicators
Erosion risks
- Customer plant closures or demand destruction in refining/chemicals
- Aggressive repricing at contract renewals
- New competing capacity built alongside new customer projects
- Regulatory constraints on hydrogen/CO2-related assets
- Regulatory tightening for new pipeline approvals
- Industrial demand shifts away from served clusters
Leading indicators
- Remaining performance obligations (backlog) trend disclosed in filings
- Average contract duration / renewal win rate on large projects
- Plant reliability and uptime (outage frequency)
- Volume growth in large-volume end markets (refining/chemicals/electronics)
- Pipeline utilization rates and new pipeline tie-ins
- Permitting activity for competitor pipeline projects in key corridors
Curation & Accuracy
This directory blends AI‑assisted discovery with human curation. Entries are reviewed, edited, and organized with the goal of expanding coverage and sharpening quality over time. Your feedback helps steer improvements (because no single human can capture everything all at once).
Details change. Pricing, features, and availability may be incomplete or out of date. Treat listings as a starting point and verify on the provider’s site before making decisions. If you spot an error or a gap, send a quick note and I’ll adjust.