Industrial gas giant Air Products (APD - Free Report) has clinched a contract to supply liquid nitrogen for Singapore government’s Jurong Rock Caverns (JRC) project. JRC is an underground storage facility for petrochemical products and the first-of-its-kind in Singapore as well as Southeast Asia.
Developed by JTC Corporation ("JTC"), the JRC project will complement and expand the infrastructure that JTC has developed on Jurong Island and facilitate the growth of chemicals and energy clusters. JTC is a government agency responsible for industrial infrastructure development in Singapore.
Liquid nitrogen to be supplied by Air Products for the project will be utilized as a blanketing gas for the oil storage caverns for safety purposes. Singapore's energy and chemical industry is a strategic market for Air Products and JRC represents a major contract for the company in Southeast Asia.
Air Products, which has more than 16 years of experience in the Singapore market, has established long-term associations with a number of local and multinational companies. It started catering petrochemical customers on Jurong Island back in 1997 through an air separation plant located at Sakra. In addition to this, Air Products also has a fleet of road tankers supplying liquid products, a helium and specialty gas plant in Senoko and an epoxy additives and a polyamide plant in Gul Crescent.
Air Products benefits from a diverse customer base, sustained pricing power and cost-reduction measures. New business deals and strategic investments are expected to support results in fiscal 2014.
The acquisition of a 67% stake in Chilean industrial gas company, Indura S.A., has ushered in substantial growth opportunity for Air Products. Moreover, the EPCO buyout complements its goal of expanding its portfolio of industrial gases offerings in North America.
Air Products is also seeing incremental opportunities in the liquefied natural gas (LNG) space. Moreover, it is making significant progress in its hydrogen business and is constructing a new world-scale hydrogen production plant in Canada.
However, Air Products’ tonnage gases business continues to face challenges due to maintenance outages. Moreover, higher energy costs pose a threat to margin expansion.
Air Products is a Zacks Rank #4 (Sell) stock.
Other companies in the chemical industry with favorable Zacks Rank include Methanex Corporation (MEOH - Free Report) , The Dow Chemical Company and LyondellBasell Industries NV (LYB - Free Report) . All retain a Zacks Rank #2 (Buy).