Air Products to Supply Onsite Oxygen - Analyst Blog
September 07 2011 - 9:39AM
Zacks
Air Products & Chemicals Inc. (APD) grabbed
a contract to supply onsite oxygen, compressed dry air, and
nitrogen to INEOS Bio's joint venture in Vero Beach,
Florida.
Air Products has more than 50 years of experience in oxygen and
nitrogen on site gas production. Nitrogen generators and oxygen
generators are part of Air Products' high quality portfolio of
onsite gas generation equipment providing reliable supplies of
industrial gases.
Air Products will supply gaseous oxygen from a PRISM VSA Oxygen
Generation System as well as bulk liquid oxygen and liquid nitrogen
delivered to the site by trucks.
INEOS New Planet is being built with an investment of more than
$100 million and will be the first commercial scale plant to
produce third generation bio-ethanol. Operations are expected to
begin in the second quarter of 2012. INEOS also plans to expand the
facility in 2015. The plant will occupy a site, which was earlier
an agricultural processing facility.
INEOS New Planet BioEnergy received permits for construction of
the new plant in October 2010. The permits were awarded after the
environmental assessment study for plant established that the
project will not have any adverse impacts on the region.
The project is expected to generate 175 jobs during construction
and 50 permanent jobs during operation. The new plant will provide
much needed employment in the region, where unemployment rate is
16%.
Renewable Fuel Standards (RFS-2) in the United States are
driving substantial project activity in the area of advanced
biofuels. Many of these projects require industrial gases,
particularly oxygen, hydrogen, and nitrogen.
In this area, oxygen is used primarily for gasification,
hydrogen for oil upgrading to final biofuel products, and nitrogen
as an inert and fluidizing medium. Global market demand for
biofuels is likely to support significant growth in industrial gas
use over the next 10 years.
Air Products' PRISM® Gas Generation Systems supplies nitrogen,
oxygen, and hydrogen to more than 1,500 customers in over 30
countries worldwide. Global markets currently served by Air
Products' PRISM Gas Generation Systems include glass, steel,
electronics and semiconductors, non-ferrous metals, metals
processing, chemicals, food processing and packaging, and energy
production and processing.
Based in Pennsylvania, Air Products benefits from a long-term
take-or-pay contract, a consolidated industry structure, a diverse
customer base and sustained pricing power. However, soaring energy
and raw material costs pose a threat to margin expansion.
In order to compensate for escalating raw material costs, Air
Products has been increasing the price for a range of chemicals it
manufactures for industrial use. Air Products faces stiff
competition from Praxair Inc. (PX) and The
Linde Group.
We currently have a Zacks #3 Rank (short-term Hold
recommendation) on the stock.
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