Methanex Corp., the world’s largest methanol producer, and Saudi Arabian Fertilizer Co. are among chemical companies that will benefit most as coal prices climb, Alembic Global Advisors said.
The two companies use natural gas as a raw material, while a jump in the price of coal is hurting their competitors who use it as an alternative to gas. Coal has risen more than 30 percent in a year and may gain 30 percent in 2011, said Hassan Ahmed, a New York-based analyst at Alembic.
“Production costs for methanol, urea and acetic acid, in that order, are most sensitive to changes in coal prices,” Ahmed said today in a report. “Rising coal prices should, in our view, shift upwards the cost curve for these products and in turn result in margin expansion for low-cost producers.”
Higher coal prices increase earnings the most at Vancouver- based Methanex, according to Alembic, followed by Safco, a unit of Saudi Basic Industries Corp., Cairo-based Orascom Construction Industries, and Dallas-based Celanese Corp. Other gas-using chemical makers also benefiting include Industries Qatar QSC, Saudi International Petrochemical Co., Westlake Chemical Co. and Dow Chemical Co., Ahmed said.
Acetic acid is used to make polyester, paints and plastics. Urea is a compound containing nitrogen used in fertilizer.
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