|By PR Newswire||
|April 14, 2014 09:30 AM EDT||
CHICAGO, April 14, 2014 /PRNewswire/ -- Today, Zacks Equity Research discusses the Chemicals, including Dow Chemical Company (NYSE:DOW-Free Report), PPG Industries Inc. (NYSE:PPG-Free Report), Methanex Corp. (Nasdaq:MEOH-Free Report), DuPont (NYSE:DD-Free Report) and Celanese Corp. (NYSE:CE-Free Report).
The chemical industry is poised for a recovery this year and the next. The American Chemistry Council (ACC), an industry trade group, foresees national chemical output (excluding pharma) to rise 2.5% in 2014 (up from a 1.6% increase in 2013) and further improve to a 3.5% gain next year. Growth will be backed by strong agricultural market fundamentals, healthy demand from light vehicles market and a recovery in the housing market manifested by increase in building permits and a steady pick-up in home prices.
U.S. chemical exports are expected to rise 6.6% this year and 7.6% in 2015, leading to continued generation of trade surplus. Trade in chemicals is expected to rise with a recovery in global manufacturing activities.
On the global front, ACC sees production to move up 3.8% in 2014 and 4.1% in 2015 with healthy gains expected across North America and emerging markets.
The ACC expects strong capital spending in the coming years, stemming from new investments in petrochemicals and derivatives. It envisions U.S. capital spending to reach $61.2 billion by 2018.
The shale gas boom is expected to drive investment on plants and equipment in the U.S. The ACC expects U.S. chemical revenues to surpass $1 trillion and the industry to rake in record trade surpluses by 2018, partly boosted by significant share gas-driven chemical capacity.
According to the European Chemical Industry Council (CEFIC), which represents the European chemicals industry, chemical output was flat year over year in Europe in 2013, modestly better than an expected 0.5% decline. Weak demand across automotive and construction markets remain as overhang, contributing to fragile recovery. Nevertheless, CEFIC expects recovery in the European chemicals industry to continue at a sluggish pace and sees a 1% rise in output in 2014, aided by an uptick in exports.
Shale Boom Driving Chemical Investment
According to the ACC, 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.
A recent ACC report indicated that 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 Compelling Opportunity
Major chemical makers are increasingly shifting focus on businesses that cater to agriculture 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.
A healthy start in the North American growing season, 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.
Mergers and acquisitions offer chemical companies another means to shore up growth in a still challenging economic scenario. These companies remain focused on exploring growth opportunities in the fast-growing emerging markets, particularly in the lucrative regions of Asia-Pacific and Latin America.
Moreover, cost-cutting measures implemented by chemical companies including plant closures and headcount reduction should yield industry-wide margin improvements. Cash flows derived through these actions can be used for growth.
Recovery in Chinese Demand
China, a major market, is expected to see a recovery in 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. An improved demand outlook for China augurs well for the chemical industry this year.
Stocks We Like
Chemical stocks that we like include The Dow Chemical Company (NYSE:DOW-Free Report), PPG Industries Inc. (NYSE:PPG-Free Report), Methanex Corp. (Nasdaq:MEOH-Free Report), DuPont (NYSE:DD-Free Report) and Celanese Corp. (NYSE:CE-Free Report). Dow and DuPont, in particular, are witnessing strong momentum in agriculture, driven by higher demand for crop protection products.
Persistent weakness in Europe and its impact on global growth remain sources of near-term uncertainty. Western Europe continues to pose challenges on chemical stocks due to weak demand. Given the industry's sensitivity to the global economy, any negative current in the macro economy would be reflected in the prospects of the chemical companies.
In addition, weakness still persists in commercial construction, which is among the key end-use markets. Demand from some of the major manufacturing industries remains below the historic levels.
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.
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.
Zacks Investment Research
800-767-3771 ext. 9339
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.
SOURCE Zacks Investment Research, Inc.
Due of the rise of Hadoop, many enterprises are now deploying their first small clusters of 10 to 20 servers. At this small scale, the complexity of operating the cluster looks and feels like general data center servers. It is not until the clusters scale, as they inevitably do, when the pain caused by the exponential complexity becomes apparent. We've seen this problem occur time and time again. In his session at Big Data Expo, Greg Bruno, Vice President of Engineering and co-founder of StackIQ...
Jan. 19, 2017 01:15 AM EST Reads: 7,795
The cloud market growth today is largely in public clouds. While there is a lot of spend in IT departments in virtualization, these aren’t yet translating into a true “cloud” experience within the enterprise. What is stopping the growth of the “private cloud” market? In his general session at 18th Cloud Expo, Nara Rajagopalan, CEO of Accelerite, explored the challenges in deploying, managing, and getting adoption for a private cloud within an enterprise. What are the key differences between wh...
Jan. 19, 2017 01:15 AM EST Reads: 6,095
Security, data privacy, reliability, and regulatory compliance are critical factors when evaluating whether to move business applications from in-house, client-hosted environments to a cloud platform. Quality assurance plays a vital role in ensuring that the appropriate level of risk assessment, verification, and validation takes place to ensure business continuity during the migration to a new cloud platform.
Jan. 19, 2017 01:00 AM EST Reads: 1,278
"Tintri was started in 2008 with the express purpose of building a storage appliance that is ideal for virtualized environments. We support a lot of different hypervisor platforms from VMware to OpenStack to Hyper-V," explained Dan Florea, Director of Product Management at Tintri, in this SYS-CON.tv interview at 18th Cloud Expo, held June 7-9, 2016, at the Javits Center in New York City, NY.
Jan. 19, 2017 12:45 AM EST Reads: 4,688
Containers have changed the mind of IT in DevOps. They enable developers to work with dev, test, stage and production environments identically. Containers provide the right abstraction for microservices and many cloud platforms have integrated them into deployment pipelines. DevOps and containers together help companies achieve their business goals faster and more effectively. In his session at DevOps Summit, Ruslan Synytsky, CEO and Co-founder of Jelastic, reviewed the current landscape of Dev...
Jan. 19, 2017 12:00 AM EST Reads: 4,176
One of the hottest areas in cloud right now is DRaaS and related offerings. In his session at 16th Cloud Expo, Dale Levesque, Disaster Recovery Product Manager with Windstream's Cloud and Data Center Marketing team, will discuss the benefits of the cloud model, which far outweigh the traditional approach, and how enterprises need to ensure that their needs are properly being met.
Jan. 18, 2017 11:15 PM EST Reads: 4,473
The security needs of IoT environments require a strong, proven approach to maintain security, trust and privacy in their ecosystem. Assurance and protection of device identity, secure data encryption and authentication are the key security challenges organizations are trying to address when integrating IoT devices. This holds true for IoT applications in a wide range of industries, for example, healthcare, consumer devices, and manufacturing. In his session at @ThingsExpo, Lancen LaChance, vic...
Jan. 18, 2017 09:45 PM EST Reads: 6,517
Big Data, cloud, analytics, contextual information, wearable tech, sensors, mobility, and WebRTC: together, these advances have created a perfect storm of technologies that are disrupting and transforming classic communications models and ecosystems. In his session at @ThingsExpo, Erik Perotti, Senior Manager of New Ventures on Plantronics’ Innovation team, provided an overview of this technological shift, including associated business and consumer communications impacts, and opportunities it m...
Jan. 18, 2017 09:30 PM EST Reads: 5,747
WebRTC has had a real tough three or four years, and so have those working with it. Only a few short years ago, the development world were excited about WebRTC and proclaiming how awesome it was. You might have played with the technology a couple of years ago, only to find the extra infrastructure requirements were painful to implement and poorly documented. This probably left a bitter taste in your mouth, especially when things went wrong.
Jan. 18, 2017 09:30 PM EST Reads: 7,635
In their general session at 16th Cloud Expo, Michael Piccininni, Global Account Manager - Cloud SP at EMC Corporation, and Mike Dietze, Regional Director at Windstream Hosted Solutions, reviewed next generation cloud services, including the Windstream-EMC Tier Storage solutions, and discussed how to increase efficiencies, improve service delivery and enhance corporate cloud solution development. Michael Piccininni is Global Account Manager – Cloud SP at EMC Corporation. He has been engaged in t...
Jan. 18, 2017 08:15 PM EST Reads: 4,879
You have great SaaS business app ideas. You want to turn your idea quickly into a functional and engaging proof of concept. You need to be able to modify it to meet customers' needs, and you need to deliver a complete and secure SaaS application. How could you achieve all the above and yet avoid unforeseen IT requirements that add unnecessary cost and complexity? You also want your app to be responsive in any device at any time. In his session at 19th Cloud Expo, Mark Allen, General Manager of...
Jan. 18, 2017 07:30 PM EST Reads: 3,151
WebRTC is bringing significant change to the communications landscape that will bridge the worlds of web and telephony, making the Internet the new standard for communications. Cloud9 took the road less traveled and used WebRTC to create a downloadable enterprise-grade communications platform that is changing the communication dynamic in the financial sector. In his session at @ThingsExpo, Leo Papadopoulos, CTO of Cloud9, discussed the importance of WebRTC and how it enables companies to focus o...
Jan. 18, 2017 06:15 PM EST Reads: 4,201
Big Data engines are powering a lot of service businesses right now. Data is collected from users from wearable technologies, web behaviors, purchase behavior as well as several arbitrary data points we’d never think of. The demand for faster and bigger engines to crunch and serve up the data to services is growing exponentially. You see a LOT of correlation between “Cloud” and “Big Data” but on Big Data and “Hybrid,” where hybrid hosting is the sanest approach to the Big Data Infrastructure pro...
Jan. 18, 2017 05:30 PM EST Reads: 4,891
All organizations that did not originate this moment have a pre-existing culture as well as legacy technology and processes that can be more or less amenable to DevOps implementation. That organizational culture is influenced by the personalities and management styles of Executive Management, the wider culture in which the organization is situated, and the personalities of key team members at all levels of the organization. This culture and entrenched interests usually throw a wrench in the work...
Jan. 18, 2017 05:00 PM EST Reads: 1,173
In his General Session at 16th Cloud Expo, David Shacochis, host of The Hybrid IT Files podcast and Vice President at CenturyLink, investigated three key trends of the “gigabit economy" though the story of a Fortune 500 communications company in transformation. Narrating how multi-modal hybrid IT, service automation, and agile delivery all intersect, he will cover the role of storytelling and empathy in achieving strategic alignment between the enterprise and its information technology.
Jan. 18, 2017 04:45 PM EST Reads: 4,601