Bank upgrades Albemarle stock as buy opportunity

11 September 2008 14:58  [Source: ICIS news]

TORONTO (ICIS news)--JP Morgan has upgraded the shares of US specialty chemicals and catalyst producer Albemarle to “overweight” from “neutral” as fears over the effects of a slowing global economy and lower oil prices on catalyst demand was creating an opportunity for investors to buy the stock, it said on Thursday.

 

Key to Albemarle’s prospects was its newly expanded hydro-processing catalyst (HPC) capacity in Pasadena, Texas, the analysts said in a research note to clients.

 

“Catalyst performance should be the key to the company performance in the 2008 second half and in 2009,” they said.

 

Albemarle expanded its HPC capacity by 10,000 tonnes/year in the fourth quarter of 2007 and was expecting a 40-50% utilisation rate for 2008 and 100% for 2009 to meet rising demand, JP Morgan said.

 

Several refinery projects were expected to come on stream at the end of 2008, including the Reliance project in Jamnagar, India, with an estimated capacity of 582,000 bbl/day and a Sinopec project in Quingdao, China, with a capacity of 200,000 bbl/day, the analysts said.

 

“We expect Albemarle to participate in supplying new refineries with HPC catalysts,” JP Morgan added.

 

While selling 100% of Albemarle’s new capacity into the cyclical HPC market might prove difficult in the shorter term, the use of lower quality crude in refineries and more stringent environmental regulations should support demand, the analysts said.

 

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By: Stefan Baumgarten
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