Air Products $50M Indian Contract - Analyst Blog
December 14 2011 - 3:15AM
Zacks
Air Products &
Chemicals Inc. (APD) announced that INOX Air Products
Ltd., its joint venture in India, has signed a $50 million (INR 250
Crores) long-term contract with POSCO Maharashtra Steel Private
Limited (PMSPL) to supply on-site nitrogen and hydrogen gases to
its new facility located in Vile Bhagad, Maharashtra, Western
India.
PMSPL is a subsidiary of POSCO and
the site will be POSCO's second steel galvanizing project outside
Korea. Further, it will be PMSPLās first investment for production
in India. Galvanized steel is used in many outdoor, marine and
industrial applications in order to prevent corrosion. The
automobile industry is the primary target market for PMSPL in
India.
INOX Air Products will build and
operate a high purity nitrogen plant and a steam methane reformer
(SMR) hydrogen plant designed to meet the specific requirements of
PMSPL's facility in Maharashtra. Both the nitrogen plant and the
SMR are product offerings from Air Products' PRISM gas generation
portfolio. The plants are all scheduled to come on stream between
late 2012 and early 2013.
In December 2010, the company
announced four new merchant gases facilities and a long-term
on-site supply agreement for nitrogen and hydrogen with Saint
Gobain Glass in Rajasthan, India. These projects included three
ASUs and an SMR from Air Products' PRISM gas generation
portfolio.
Air Products' PRISM line of gas
generation systems supply nitrogen, oxygen and hydrogen to more
than 1,500 customers in over 30 countries worldwide. Global
markets currently served by Air Products' entire PRISM line of 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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