Air Products and Chemicals Inc. (APD) announced its plan to make two new investments in Russia, in sync with its strategy of investing in growth regions. The combined value of the investments is over $30 million.
Air Products will construct and operate an over 200 ton per day oxygen, nitrogen and argon liquefier and cylinder gases depot in Krasny Sulin – an established manufacturing locale in the Rostov region. The company expects both the liquefier and packaged gases depotto be on-stream in early 2014.
The company’s investments were implemented under a Memorandum of Collaboration (MoC), signed in October 2010 with the Administration of the Rostov region in Russia.
The new investments will allow the company to supply liquid and packaged gases to the metal, glass, food, chemical and refining industries in the Rostov and surrounding regions. With the Rostov administration recognizing the need for industrial gases for its economic growth, the company’s investments in this region represent long-term growth potential. Air Products can use its technology for developing the gas market while meeting the growing demand.
In September 2010, Air Products had signed a deal with a Russian petrochemicals company, Sibur Voronezhsintezkauchuk, for the construction and operation of an air separation unit (ASU) for supporting Sibur's manufacturing processes. This ASU is expected to be on-stream by July 2012.
Air Products Tonnage Gases and Merchant Gases segments face stiff competition from Praxair Inc. (PX) and Linde AG. Currently, the company retains a Zacks #3 Rank, which translates into a short-term (1 to 3 months) Hold rating. We have recommended the shares of the company as Neutral for the long term (more than 6 months).
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