Purchasing used or reconditioned equipment is one way of helping cash flow for startups and boosting the profits of established operations. Like any tactic, it is great if it works. During the past several years, though, it has gotten harder to find good used cryogenic tanks at any price. Here are just a few of the reasons:
- Rising steel prices and other costs have driven new equipment prices up considerably. This makes it easier for companies to justify rehabbing equipment and continuing to use it. Even if owners have no immediate needs they find it hard to sell off equipment when the cost of repurchasing a similar tank later is so high.
-Industry “Majors” regularly fed used equipment into the market until they realized that the equipment they were selling off was costing them business. Simply put- smaller independents were buying used cryogenic tanks and coming right back to take away clients by offering lower rental rates on cheaply purchased equipment. Many large companies now take the position that the opportunity cost of selling used tanks that end up in the hands of competitors far outweighs the sale price.
-Strong demand has made it easier to place liquid oxygen, nitrogen or argon equipment pulled from one site with another client in short order. In fact, suppliers have typically found that equipment moved to a new client generates higher rentals than at the old clients so upgrades are encouraged.
-Risk calculations also come into play for sellers who have to weigh short term savings against long-term exposure.
There are few clues on what will occur during 2009 related to used cryogenic equipment markets. For now there is nothing that indicates either an increase in availability or lowering of prices.
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