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Industrial gases giant Air Products and Chemicals (APD - Analyst Report) has entered into a hydrogen and nitrogen supply contract with steel giant ArcelorMittal (MT - Analyst Report). Air Products will provide ArcelorMittal with three PRISM PHG100 hydrogen gas generators (PHG) and a high-purity PRISM GN700 nitrogen generator for the latter’s Saint Chely d'Apcher plant located in Southern France.

Air Products supplies and produces hydrogen on-site through a range of compact and low- to medium-capacity steam methane reformers (SMR). The SMR technology efficiently and economically converts steam and lighter hydrocarbons, like methane, into hydrogen and carbon monoxide.

PRISM PHG generator is an alternative source of industrial gas supply to trailers (bulk hydrogen) to customers in distant locations. It also minimizes logistics costs and carbon footprint related with regular truck rotations.

The three PRISM PHG100 hydrogen gas generators with on-site modular concept help ArcelorMittal to operate at the required capacity even when one of the generators is offline and thus the remaining modules and backup storage ensure uninterrupted service.

These gas generators with favorable alternative solution are preferred since Saint Chely d'Apcher plant is not suitable for large amounts of gaseous hydrogen storage. Also, the installation of these gas generators are both reliable and flexible as each generator can operate at 50% capacity, thus offering flow rates from 50 Nm3/h to 300 Nm3/h.

The plant’s nitrogen requirements are met by PRISM cryogenic generator that supplies nitrogen using a unique technology of distillation to produce high-purity nitrogen. Along with the generator, two nitrogen backup storage tanks and four vaporisers have been installed to ensure a continuous supply of nitrogen gas at the plant.

At the plant, hydrogen and nitrogen gases are used in the electric engines and wind turbines to produce non-grain-oriented electrical. This helps ArcelorMittal to increase its high-value steel products’ production at lower carbon dioxide emissions. The on-site hydrogen production concept of Air Products also contributes in ArcelorMittal’s savings by enhancing plant operations and reducing the start-up time.

The total design, fabrication, installation, technical support, and telemetry service of the equipment are performed by Air Products. Operational control of the entire system is performed from Air Products' Operating Service Centre (OSC) in France through experienced OSC operators who monitor critical metrics all the time.

Air Product’s fourth-quarter fiscal 2013 (ended Sep 30, 2013) adjusted earnings from continued operations of $1.47 a share increased 3.5% from the year-ago earnings of $1.42. However, revenues declined 0.7% year over year to $2,586.5 million. The decline was due to lower base volumes and a negative impact resulting from the exit decision of the Polyurethane Intermediates (PUI) business, partly offset by higher energy pass-through and favorable currency translation.

For fiscal 2013, Air Products plans to take a number of steps including execution against backlog, winning profitable new projects, loading existing assets, and implementing further productivity and cost initiative measures. The company expects that its recent strategic moves will position it for future growth and profitability and help to build momentum and accelerate earnings growth despite the weak macroeconomic condition.

Air Products currently holds a Zacks Rank #4 (Sell).

Other companies in the chemical industry worth considering include Methanex (MEOH - Analyst Report) and Asahi Kasei (AHKSY). Both carry a Zacks Rank #1 (Strong Buy).

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