Dog days are good for materials firms' stocks

By Frank Esposito
Senior Staff Reporter

Published: August 23, 2013 2:26 pm ET
Updated: August 23, 2013 2:48 pm ET

Image By: Rich Williams

Related to this story

Topics Materials Suppliers, Financial
Companies & Associations A. Schulman Inc., Dow Chemical Co., DuPont Co., Eastman Chemical Co., Ferro Corp., Georgia Gulf Corp., Huntsman Corp., Kraton Polymers LLC, Houston, Omnova Solutions Inc., Westlake Polymers Corp., PolyOne Corp.

As the stock market moves through the dog days of August, executives with most publicly held plastic materials makers have to be happy with how their firms' per-share stock prices have done in 2013.

Through Aug. 13, 15 of 17 public materials firms tracked by Plastics News had a higher per-share price than they did on Jan. 1. Per-share prices at Omnova Solutions, Huntsman Corp., Eastman Chemical Co., Dow Chemical Co., LyondellBasell Industries and Cytec Industries each were up 13-24 percent. These rises roughly matched year-to-date gains for the Dow Jones Industrial Average (up 18 percent), Nasdaq (up almost 22 percent) and the S&P 500 (up almost 19 percent).

Bigger winners through Aug. 15 included PolyOne Corp., DuPont Co., Westlake Chemicals Corp. and Hexcel Corp., each up 31-43 percent. PolyOne's deeper move into specialty products appears to be paying off for the company, while Westlake was riding North America's feedstock advantage via abundant natural gas to an eye-popping per-share price of almost $104.

Axiall Corp. (the newly named merger of Georgia Gulf with the specialty chemicals unit of PPG) posted a more modest per-share gain of almost 7 percent through Aug. 13, as did Rogers Corp., which was up just over 8 percent. The per-share price of bioplastics maker Metabolix Inc. was up a little less than 1 percent, placing its per-share price around $1.40.

The big percentage winner among the group was Ferro Corp., which had seen its per-share price surge 80 percent to $7.50 through Aug. 13. Ferro's climb was all the more unlikely as the firm battled with discontented shareholders and warded off a takeover bid from A. Schulman Inc. in the first eight months of the year.

And although Cereplast Corp.'s per-share price of 2.9 cents might not raise eyebrows, it was 28 percent higher Aug. 13 than where it was at the start of the year.

The only PN-tracked materials firms that might be counting the days until 2013 are Schulman and Kraton Performance Polymers Inc. Schulman, with most of its sales coming from the low-growth European market, had seen its per-share price slip more than 4 percent through Aug. 13. Kraton's per-share price had tumbled 20 percent, due in part

to missing earnings estimates for three straight quarters.

These stock gains have come even as U.S. gross domestic product has shown meager growth of 1.1 percent in the first quarter of 2013 and 1.7 percent in the second. Materials firms have been able to weather a 16 percent rise in crude oil prices that has pushed per-barrel prices close to $107 so far in 2013. By comparison, U.S. natural gas prices were near $4.50 per million British thermal units earlier this year, but had receded to under $3.50 as of Aug. 13.

A declining U.S. unemployment rate also may have helped materials makers a bit. July's 7.4 percent unemployment rate was the lowest seen in the U.S. since early 2009.

North American chemicals makers have benefited from abundant supply and low prices for natural gas-based ethane, a feedstock used to make ethylene, according to analysts Taylor Muckerman and Joel South at the motleyfool.com financial website.

"As ethane demand slowly begins to increase, it is very likely that the price will tick up with it, which should be a good thing for all involved," they wrote in a recent research note. "Local producers have more than enough supply to accommodate these [recently announced] capital projects, so it's doubtful that the chemical companies will lose the entire margin advantage any time soon."

Esposito is an Akron-based Plastics News senior reporter.


Comments

Dog days are good for materials firms' stocks

By Frank Esposito
Senior Staff Reporter

Published: August 23, 2013 2:26 pm ET
Updated: August 23, 2013 2:48 pm ET

Post Your Comments


Back to story


More stories

Image

Foster building medical polymers plant

September 19, 2014 1:39 pm ET

Foster Delivery Science is investing $8 million in a new plant in Putnam, Conn., for production of medical polymer blends, as well as rods, film or...    More

Image

BP to restart damaged PTA unit in limited capacity by November

September 19, 2014 10:27 am ET

British Petroleum plc may restart its fire-damaged purified terephthalic acid (PTA) feedstock unit in South Carolina in late October or early...    More

Image

Bayer spinning off plastics business

September 18, 2014 8:49 am ET

Bayer AG will spin off its MaterialScience plastics group into a separate, publicly-traded company within the next 12 to 18 months.    More

Image

Investor group wants DuPont to split in two

September 18, 2014 7:37 pm ET

Investment firm Trian Fund Management LP is calling for plastics and chemicals giant DuPont Co. to split itself into two firms, one of which would...    More

Image

China's Polymax Elastomer launches U.S. production in Illinois

September 17, 2014 3:35 pm ET

Chinese materials maker Polymax Elastomer Technology Co. Ltd. has opened a North American production site and headquarters in Waukegan, Ill.    More

Market Reports

Plastics Caps & Closures Market Report

The annual recap of top trends and future outlook for the plastics caps & closures market features interviews with industry thought leaders and Bill Wood’s economic forecast of trends in growing end markets. You will also gain insight on trends in caps design, materials, machinery, molds & tooling and reviews of mergers & acquisitions.

Learn more

Shale Gas Market - Analysis of North American Region

This report highlights the impact of shale-based natural gas on the North American plastics market and features an in-depth analysis of production trends in the United States during 2013 and a forecast for 2014 and beyond.

Learn more

Thermoformed Packaging 2014 Market Review & Outlook – North America

This in-depth report analyzes economic and market trends, legislative/regulatory activity impacting supply and demand, business opportunities and threats, materials pricing, manufacturing technology, as well as growth strategies being implemented by thermoformed packaging companies.

Learn more

Upcoming Plastics News Events

January 14, 2015 - January 14, 2015Plastics in Automotive

February 4, 2015 - February 6, 2015Plastics News Executive Forum 2015

More Events