APD Air Products and Chemicals Inc

Recently Praxair Inc’s (PX) Canadian unit, Praxair Canada Inc. commenced operations at a cryogenic air separation plant, which will supply over 900 tons of gaseous oxygen daily to Essar Steel Algoma Inc.’s steel mill.

 A member of the Essar Group, Essar Steel Algoma Inc. specializes in the manufacturing and selling of hot and cold rolled steel products. It’s steel plant is located in Sault Ste. Marie, Ontario, Canada.

Praxair’s extension with its new facility in Canada will not only satisfy Essar’s needs for gases but will also increase the company’s total installed capacity to 2,700 tons per day in the region.

It is evident from the present scenario that the growth prospects of industrial gas producers are very bright going forward, with demand for gases ever on the rise due to their wide application areas. Hydrogen for refining; oxygen for healthcare; and nitrogen and carbon dioxide for oil and gas production are being increasingly used.

Praxair seems well positioned to leverage from the growing industrial gases market. For the long run, the company has set a goal to achieve annual organic sales growth of 8%-12%. Contribution from emerging markets, including South America, Asia, and Mexico, is expected to increase to 45% of total sales by 2015 compared with 36% in the fiscal year 2010.

Praxair is one of the leading companies engaged in the production and distribution of industrial gases, primarily catering to demands in North America, South America, Europe, and Asia. Prime competitors of the company include Air Products & Chemicals Inc. (APD) and L'Air Liquide SA.

We currently maintain a Neutral recommendation on the stock.

 
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