Industrial gas producer and supplier Praxair Inc. PX recently completed the extension of its pipeline to execute a gaseous oxygen supply contract from Kumbi Corporation, one of the largest glass bottle makers in South Korea.
As disclosed, Praxair extended the pipeline by 6 miles, enabling the supply of approximately 100 tons of gaseous oxygen per day from the company’s Tangjung plant to Kumbi’s two glass-melting furnaces at Asan. Also, the company has installed its Oxy-burner technology in Kumbi’s facility.
This association will allow Praxair to strengthen its footprints in the industrial gas market of South Korea. In Mar 2015, the company was awarded a contract to supply gaseous oxygen to the world’s largest glass container manufacturer, Owens-Illinois. In addition, the company extended its dilute oxygen combustion Wide Flame Burner technology to Owens-Illinois’ glass facility, apart from providing the oxy-fuel combustion flow control skids.
We believe that such contract wins reflect growing preference of customers for Praxair’s world-class products and services. Also, increasing use of industrial gases in manufacturing, transportation, healthcare, food and beverages, and metal fabrication industries is a boon for industrial gas producers.
Despite such contract wins and bright prospects, certain near-term headwinds are affecting Praxair’s performance. The stock currently carries a Zacks Rank #4 (Sell), with a market capitalization of $34.9 billion. The Zacks Consensus Estimate is pegged at $6.32 for 2015 and $7.02 for 2016.
Better-ranked stocks in the chemical diversified industry include Asahi Kasei Corporation AHKSY, Innospec Inc. IOSP and Air Products & Chemicals Inc. APD. While Asahi Kasei and Innospec sport a Zacks Rank #1 (Strong Buy), Air Products & Chemicals carries a Zacks Rank #2 (Buy).
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