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Recently, Airgas Carbonic – a subsidiary of diversified chemical company Airgas, Inc. (ARG - Analyst Report) – inked a long-term agreement for the supply of liquid carbon dioxide (CO2) from Fox River Valley Ethanol's plant in Oshkosh, WI. The deal will improve Airgas’s ability to supply liquid CO2.

According to the agreement, Airgas will sell food and beverage-grade liquid CO2 co-products from the plant. The plant will have a capacity to produce 250 tons of liquid CO2 per day and is expected to become operational in Oct 2013.

As ethanol plants are an important source of liquid CO2 in the Midwest, the contract will enable Airgas to fulfill the food and beverage needs and thereby satisfy industrial and bulk gas customers in the region.

The new agreement marks an expansion of Airgas' liquid CO2 sources to Wisconsin, from Stanley and Jefferson. Notably, the company is a leading supplier of liquid CO2 in the U.S. with a total of eight production plants.

For fiscal 2014, Airgas revised its earnings guidance in the band of $5.00 to $5.35 per share (reflecting 15% to 18% annual growth) based on modest sequential improvement in daily sales volumes and low to mid single-digit year-over-year organic sales growth rates. Strong cash flow continues to be one of the strengths in Airgas’ business model.

Airgas is also optimistic about the long-term prospects of the U.S. manufacturing and energy industries and non-residential construction. It also expects a less challenging environment going forward.

Based in Pennsylvania, Airgas, through its subsidiaries, distributes industrial, medical and specialty gases as well as hardgoods in the U.S. The company also markets its products and services through e-business, catalog and telesales channels.

Airgas currently carries a short-term Zacks Rank #3 (Hold).

Other chemical stocks that are worth a look include Akzo Nobel NV (AKZOY), Eastman Chemical Co. (EMN - Analyst Report) and Ferro Corporation (FOE - Snapshot Report).  All of them hold a Zacks Rank #2 (Buy).

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