Praxair Starts Air Separation Plant in Tennessee - Analyst Blog

Industrial gas producer, Praxair Inc. PX yesterday announced the start-up of a new air separation plant in Memphis, TN. This decision to strengthen the company's presence in the southeastern U.S. will boost growth in the quarters ahead.

The new air separation plant has a capacity of 600 tons per day. Through it, Praxair can supply liquid and gaseous oxygen, nitrogen and argon to various customers in the region, satisfying their cylinder as well as bulk and on-site gas needs.
 
Prior to this, in Apr 2014, Praxair began operating an air separation plant, with a capacity of 270 tons per day, in Pisco, Peru. Presently, the plant caters to industrial gas (oxygen) needs of Aceros Arequipa, the largest long steel maker in Peru.

Additionally, in Mar 2014, Praxair started a new air separation plant with daily production capacity of 1,250 metric tons, for the Steel Authority of India (SAIL). It supplies gaseous oxygen, nitrogen and argon to SAIL's steel-making facility located at Bhilai.  

In 2013, Praxair derived 95% of its total revenue from North America, Europe, South America and Asia. Among these geographic segments, growth prospects are very bright in China, India and Korea. Volume growth due to plant start-ups in these regions contributed significantly to the company's total revenue growth in 2013.

We believe that the industrial gas related business has immense growth opportunities. Applications of industrial gases have increased manifold in recent times. Hydrogen is being increasingly used in the refining industry, while oxygen has found use in healthcare, and nitrogen and carbon dioxide are used in oil and gas production. Hence, the long-term growth prospects are bright for players in this industry.

A series of plant start-ups and contract wins across various nations signify the growing preferences for Praxair's world class technology, high quality products and gas supply services. By 2017, the company anticipates to reach revenue of $16 billion, including hydrogen sales of $1.7 billion.

Praxair presently has a $39.2 billion market capitalization and carries a Zacks Rank #3 (Hold). Over the next five years, the company's earnings are expected to grow 11.7%. Other major players in the same industry include Compass Minerals International Inc. CMP, Eastman Chemical Co. EMN and PetroLogistics LP PDH. While Compass Minerals International sports a Zacks Rank #1 (Strong Buy), both Eastman Chemical and PetroLogistics hold a Zacks Rank #2 (Buy).

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