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Plastics majors fared well in 2012

By: Frank Esposito

January 11, 2013

Stock prices at PolyOne, Huntsman Corp., Eastman Chemical Co. and Omnova Solutions Inc. each were up 50-75 percent from Jan. 1 to the close of trading Dec. 17. PolyOne’s focus on specialty markets helped to fuel a price gain of almost 72 percent. The market also reacted positively to PolyOne’s purchase of sheet maker and compounder Spartech Corp.

Georgia Gulf Corp. and Westlake Chemical Corp. each fared even better on the stock-price front during 2012. Georgia Gulf’s per-share price more than doubled, climbing 120 percent, while Westlake posted a 96 percent per-share gain. Both firms saw their PVC businesses benefit from access to low-cost, natural gas-based feedstocks. Those feedstocks also helped Westlake’s polyethylene business unit.

These outsized returns make the 31 percent gain enjoyed by compounder A. Schulman Inc. seem modest by comparison. Schulman benefited from exiting low-margin businesses and working to build its color and additive concentrates markets, particularly in North America.

Dow Chemical Co., with a much broader global plastics and chemicals portfolio, managed a per-share price gain of about 11 percent. Kraton Performance Polymers Inc., with a focus on styrenic block copolymers, saw its price grow about 16 percent during 2012.

Not every publicly held plastics-related firm enjoyed 2012, however. Stock prices at global chemicals giant DuPont Co. and world acetal leader Celanese Corp. each fell about 3 percent during 2012, as slowing international businesses began to take their toll. Specialty chemicals maker Ferro Corp., which gets about 10 percent of its sales from plastics, saw its per-share price take a 36 percent hit as demand for its products in solar energy markets tumbled.

And while the bloom may not entirely be off the bioplastics market, Wall Street investors sure haven’t warmed to it yet. Cereplast Corp. saw its per-share price slide all the way to 4 cents — a 95 percent plummet. Fellow bioplastics maker Metabolix did not do much better during 2012, with a slide of almost 60 percent taking its price below $2 per share.

As for 2013, Dow Chemical’s prospects are good, according to financial website TheStreet.com. On Dec. 17, the site’s staff said Dow’s strengths “can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and increase in stock price during the past year.”

And at The Motley Fool financial site, www.fool.com, analyst Seth Jayson states that Georgia Gulf is in good shape, based on its inventory levels. “Georgia Gulf may display positive inventory divergence, suggesting that management sees increased demand on the horizon,” he wrote Dec. 5.

PolyOne and other firms that were on the rise in 2012 are likely to be just fine in 2013 with stock gains half the size of the upswings they enjoyed this year.

Esposito is a senior reporter for Plastics News.