Airgas, Inc. ARG has signed a long-term agreement to build an air separation unit (ASU) to supply tonnage oxygen, nitrogen and argon to Nucor Steel Tuscaloosa, Inc., a subsidiary of Nucor Corporation NUE, at its steel manufacturing plant in Tuscaloosa, AL.
Airgas plans to construct the new large-scale ASU adjacent to the existing Nucor facility. The new plant will be operated by Airgas Merchant Gases, which manages Airgas’ network of ASUs, sourcing options for all major gases and bulk gas distribution logistics.
The partnership with Nucor will strengthen Airgas’ gas supply chain, ensuring long-term reliability for packaged and merchant gas customers throughout the region. The new plant will serve Nucor Steel’s gas needs in Tuscaloosa via pipeline and expand merchant gas presence in the region.
On the other hand, Airgas’ investment in new production capabilities in Tuscaloosa will provide supply security to Nucor along with an innovative and highly reliable long-term supply system. The ASU is expected to begin production in the spring of 2017.
Airgas has 16 air separation plants globally and it is the fifth largest producer of atmospheric gases in North America. The company’s air separation facilities and national specialty gas labs primarily produce gases that are sold by the various regional and other business units within the Distribution business segment.
For the fourth quarter, Airgas curtailed its guidance for year-over-year organic sales growth to 1–2% from the previous projection of 6–7%. The company also trimmed its earnings per share guidance for the quarter to $1.13–$1.16 from $1.25–$1.30.
Airgas anticipates sales to remain challenging in the upcoming quarter due to uncertainty caused by significant and rapid decline in oil prices. Apart from the drop in oil prices, the negative impact of strong dollar on manufacturing exports also contributed to the slash in outlook.
Radnor, PA-based Airgas, through its subsidiaries, distributes industrial, medical and specialty gases as well as hardgoods in the U.S. The company also markets its products and services through e-Business, catalog and telesales channels.
Airgas currently carries a Zacks Rank #4 (Sell).
Stocks to consider in the chemical-diversified industry include Air Products & Chemicals Inc. APD and Mitsubishi Chemical Holdings Corporation MTLHY, both carrying a Zacks Rank #2 (Buy).
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