Friday, November 2, 2012

Chemicals Industry Exploding In The U.S. As Cheap Natural Gas Sends Stocks Near Multi-Year Highs

I talked about this about a year ago in August.  In fact, I said that natural gas *IS* the Next Big Thing. The basic feedstock for the chemicals industry in the USA is natural gas.  When the price topped out, many of the plants here closed up.  But now they are all talking expansion.

The U.S. is perfectly positioned to take advantage of the chemicals market with the emergence of shale gas. Years ago, the U.S. appeared as a market in decline, given it didn’t have comparative advantages in terms of costs or demand, which had shifted to China and Asia. “The U.S. has about 20 to 30 years to benefit from this,” said Ticktin.

And investors can get a cut of the action. Years ago, major chemical companies like Du Pont and Dow Chemical began to move their operations overseas. But today, companies with access to feed stocks that are associated with the production of natural gas, such as propane and ethane, will see a boost in their performance. Major oil and gas companies like Chevron, Exxon Mobil, and Royal Dutch Shell are well positioned to benefit.

Companies in the coatings and paints business will also do well, according to Ticktin. Sherwin-Williams and PPG, for example, are trading near their 52-week highs, while Du Pont and Dow Chemical are on their way back.

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