Advertisement
U.S. markets open in 2 hours 55 minutes
  • S&P Futures

    5,206.00
    -8.75 (-0.17%)
     
  • Dow Futures

    39,193.00
    -30.00 (-0.08%)
     
  • Nasdaq Futures

    18,187.00
    -44.50 (-0.24%)
     
  • Russell 2000 Futures

    2,046.10
    -3.70 (-0.18%)
     
  • Crude Oil

    82.45
    -0.27 (-0.33%)
     
  • Gold

    2,158.20
    -6.10 (-0.28%)
     
  • Silver

    25.12
    -0.14 (-0.55%)
     
  • EUR/USD

    1.0846
    -0.0031 (-0.28%)
     
  • 10-Yr Bond

    4.3400
    0.0000 (0.00%)
     
  • Vix

    14.60
    +0.27 (+1.88%)
     
  • GBP/USD

    1.2682
    -0.0046 (-0.36%)
     
  • USD/JPY

    150.5760
    +1.4780 (+0.99%)
     
  • Bitcoin USD

    63,112.04
    -4,893.54 (-7.20%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • FTSE 100

    7,718.56
    -3.99 (-0.05%)
     
  • Nikkei 225

    40,003.60
    +263.20 (+0.66%)
     

Zacks Industry Outlook Highlights: Albemarle, Rockwood Holdings, LyondellBasell Industries, Celanese and Dow Chemical

For Immediate Release

Chicago, IL – August 13, 2014 – Today, Zacks Equity Research discusses the Chemicals, including Albemarle Corp. (ALB-Free Report), Rockwood Holdings, Inc. (ROK-Free Report), LyondellBasell Industries NV (LYB-Free Report), Celanese Corp. (CE-Free Report) and Dow Chemical Company (DOW-Free Report).

Industry: Chemicals

Link: http://www.zacks.com/commentary/33890/chemical-industry-recovery-stays-the-course

Emerging market growth and favorable oil-to-gas price ratios resulting from abundant shale gas production are driving U.S. chemical exports. A string of factors are driving growth in the export markets, including favorable energy costs stemming from the abundance of shale gas and healthy demand from the emerging markets.

Affordable natural gas and ethane (derived from shale gas) offer U.S. producers a compelling cost advantage over their global counterparts who use a more expensive, oil-based feedstock. New methods of extraction such as horizontal drilling and hydraulic fracturing are boosting shale production, bringing down prices of ethane in the process.

Leveraging the abundant natural gas supply and cost advantage, chemical companies are investing billions of dollars for setting up facilities (crackers) that produce ethylene from ethane. The U.S. has emerged as an attractive investment location and chemical makers are aggressively expanding capacity in the country.

According to an ACC report, potential domestic chemical investment related to share gas has reached as high as $100 billion, more than 50% of which are from firms outside of the U.S. Already 148 projects -- backed by Federal government support -- have been announced by chemical makers to take advantage of ample natural gas supplies.

These projects may lead to $81 billion in new chemical industry output annually and 637,000 permanent new jobs by 2023. Such investments are expected to boost capacity and export over the next several years.

Agriculture: A Lucrative Prospect

Major chemical makers are increasingly shifting their focus on businesses that cater to agriculture and health and nutrition markets in an effort to cut their exposure on other businesses that are grappling with weak demand and input costs pressure. In particular, agriculture is emerging as a lucrative market as evident from recent trends.

Strong planting activity by growers across North and Latin America, solid order book and healthy supply of seeds and crop protection products represent driving factors.

Strategic Measures: M&A Heating Up

Chemical companies remain actively focused on mergers and acquisitions to diversify and shore up growth in a still challenging economic environment. These companies continue to explore growth opportunities in the fast-growing emerging markets, particularly in the lucrative regions of Asia-Pacific and Latin America.

The chemical industry is expected to witness high levels of consolidation activities in 2014 with some major deals have already been announced this year including Albemarle Corp.’s (ALB-Free Report) proposed buyout of Rockwood Holdings, Inc. (ROK-Free Report) for $6.2 billion. Chemical makers are also divesting non-core assets as they shift their focus on high margin businesses.

Moreover, cost-cutting measures implemented by chemical companies -- including plant closures and headcount reduction -- are expected to yield industry-wide margin improvements. Cash flows derived through these actions could be directed for growth initiatives.

Recovery in Chinese Demand

Recovery in China, a major market, is expected to continue through the balance of 2014. Government stimulus actions coupled with efforts to stem inflation appear to bear fruit and exports to the U.S. and other key markets are regaining momentum. Strength in the automotive market represents another positive. An improved demand outlook for China bodes well for the chemical industry this year.

Stocks We Like

Chemical stocks that look good in the prevailing operating backdrop include LyondellBasell Industries NV (LYB-Free Report), Celanese Corp. (CE-Free Report), The Dow Chemical Company (DOW-Free Report) and others.

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Click here for your free subscription to Profit from the Pros.

Get the full Report on ALB- FREE
Get the full Report on ROK- FREE
Get the full Report on LYB- FREE
Get the full Report on CE- FREE
Get the full Report on DOW- FREE

Follow us on Twitter: http://twitter.com/zacksresearch

Join us on Facebook: http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts

Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.

Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
support@zacks.com
http://www.zacks.com


Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.


Read the analyst report on ALB

Read the analyst report on ROK

Read the analyst report on LYB

Read the analyst report on CE

Read the analyst report on DOW


Zacks Investment Research

Advertisement