Arkema (ARKAY) to Expand DMDS Production Capacity in Texas
Arkema S.A. ARKAY, has announced the expansion of its global production capacity of DMDS (dimethyl disulfide) at its Beaumont facility in the United States. This strategic move is driven by the rapidly growing biofuel market, which is fueled by the demand for sustainable solutions and the imperative to decarbonize road and air transportation.
The development of biofuels is critical in the quest for decarbonization, particularly in the aviation sector. DMDS plays a pivotal role as an additive in the production of renewable fuels. It has proven to be the most efficient solution in assisting biorefineries in converting vegetable oils and agricultural waste into renewable fuels.
As the world leader in DMDS production, Arkema supplies sulfur-based and specialty solutions to facilitate the growth of its customers in Europe, Asia, and North America. DMDS not only enables the production of clean and renewable fuels but also enhances the efficiency of the purification and transformation processes it is involved in. Additionally, DMDS has applications in crop protection and serves as a raw material in the production of Sulfonyls, particularly in the electronics industry.
With existing production capacities in Lacq, France, and Kerteh, Malaysia, along with a renowned customer service and support infrastructure, Arkema is strategically positioned to serve its customers across the three major regions where the company operates. The expansion in the Beaumont site in Texas represents a significant investment aimed at meeting the surging demand, especially in the United States, and providing local supply in the region.
The recent investment in the Beaumont site is poised to address the robust surge in demand, especially within the United States, while also ensuring a localized supply for the region. This initiative aligns perfectly with Arkema's commitment to bolster the transition toward renewable energy sources. Furthermore, it will empower the company to consolidate its standing as a prominent global contributor in the burgeoning market of environmentally sustainable sulfur derivatives and cutting-edge materials.
This investment, totaling €130 million (roughly $138 million), will not only boost production but also create job opportunities at the Beaumont site, while enhancing the site's upstream and downstream integration. The project is expected to commence operations in the second quarter of 2025.
Shares of Arkema have gained 35% in the past year against an 8.5% rise of the industry.
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Zacks Rank & Key Picks
Arkema currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the basic materials space are WestRock Company WRK and Hawkins, Inc. HWKN, both sporting a Zacks Rank #1 (Strong Buy), and Alamos Gold Inc. AGI, carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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