Chemical suppliers cut costs to the bone during the downturn
Chemical Industry Profits to carry on Rising
Chemical suppliers spend less towards the bone throughout the downturn. Using the economy now growing, product demand in individual industry segments is growing. The resulting operating leverage helps chemical companies widen their margins.
Farming Chemicals: The secular forces of worldwide population growth and greater per-capita earnings in emerging economies are lifting commodity crop prices. The Un reports that global food pricing is at record levels.
High crop prices provide significant incentive for maqui berry farmers to improve acreage and yields. The U.S. Department of Agriculture lately mentioned that U. S. corn acreage this season could be second greatest in 67 years.
Fertilizer producers like Potash Corporation (POT) and Agrium (AGU) in addition to seed developers like Monsanto (MON) and DuPont (DD) are in position to take advantage of the drive to improve farm output.
Petrochemicals and Plastics: Interest in petrochemicals and plastics is booming from development in emerging markets and recovery from the auto industry.
Global capacity utilization for ethylene production, a bellwether for plastics manufacture, is forecasted to improve to 90% by 2013 from 84% in '09.
The automotive industry makes up about 10% of U. S. chemical industry demand. Plastics manufacture should get a boost as global auto demand approaches 76 million units.
Dow jones Chemical (Dow jones), BASF Corp. (BASFY.PK) and LyondellBasell Industries (LYB) are some of the world?¡¥s top petrochemicals and plastics producers. Ample way to obtain shale gas especially in the U. S. will help their margins.
Niche Chemicals and Building Materials: Niche chemical stocks typically have a tendency to succeed at the begining of to mid-cycle phases of monetary recoveries as demand increases they are driving volume growth.
Solutia (SOA), making various chemical and engineered materials utilized in consumer and industrial applications, is well-positioned to profit from growing global construction activity.
Building products manufacturer U.S. Gypsum (USG), roofing products manufacturer Owens Corning (OC), and paint manufacturers Sherwin Johnson (SHW) & Valspar (VAL) can also fare well in different levels.
