18 May 2012 12:31 [Source: ICIS news]
LONDON (ICIS)--The fall in the price of crude oil is expected to lower chemical costs in ?xml:namespace>
Bernstein said that the European chemicals industry was able to offset cost inflation through price increases in March, adding that the drop in the price of crude oil should lower costs in
Bernstein said price increases will strongly improve earnings for European chemical companies.
“We believe pricing is one of the most powerful ways for chemicals companies to drive earnings growth. However, prices for much of the chemicals industry are relatively opaque, with the exception of some of the large commodity products such as petrochemicals and fertilizers,” Bernstein said.
The analyst said it favours companies that are in segments that can hold prices in the deflationary cost environment or that have “defensive characteristics”.
“Fitting these descriptions are the following: paints and coatings and chlor-alkali, such as AkzoNobel and Sherwin-Williams PPG; and industrial gases, such as Air Liquide, Linde, and Praxair and Air Products,” it said.
However, the analyst said when cost inflation resumes, petrochemicals producers such as Germany’s BASF would become “preferred”.
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