Weekly Update: Chemical Companies, Week Ended September 22, 2017

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Weekly Update: Chemical Companies, Week Ended September 22, 2017 PART 1 OF 14

Ashland’s Texas and Marl Manufacturing Plants Resume Operations

Update on Ashland’s manufacturing plants

On September 18, 2017, Ashland (ASH) announced that it has resumed normal operations at its manufacturing plant in Texas and its Marl manufacturing plant in Germany. The Texas plant was shut down last month due to Hurricane Harvey. The facility manufactures PVP (polyvinylpyrrolidone) linear and crosslinked homopolymers, PVP/VA (polyvinylpyrrolidone/vinyl acetate) copolymers, and NMP (N-methyl-2-pyrrolidone).

ASH doesn’t expect any material impact on its 3Q17 earnings. Ashland’s chair and chief executive officer William A. Wulfsohn said, “This was an incredible team effort to help the Texas City plant return to safe and responsible operations following such a tragic event.”

Ashland&#8217;s Texas and Marl Manufacturing Plants Resume Operations

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The Marl facility in Germany was shut down on August 11, 2017, due to a fire in the plant. It is resuming production of 1.4 butanediols (or BDO), tetrahydrofuran (or THF), and formaldehyde. The facility resumed its operations ahead of schedule, and ASH thus expects the loss to be reduced by $5.0 million. It now pegs the loss in the range of $10.0 million–$15.0 million. The Intermediates and Solvents segment will be impacted in the company’s 3Q17 earnings.

Ashland’s stock performance

Ashland stock made a small gain of 0.20% and closed at $64.17 last week. The gain was because ASH was trading marginally above the 100-day moving average of $64.16, indicating a turnaround in the trend. Analysts see an upward trend in the stock and have recommended one-year target price of $72.75, indicating a potential return of 13.4% over the closing price on September 22, 2017. ASH’s 14-day relative strength index of 60 indicates that the stock is neither overbought nor oversold.

Investors can hold Ashland indirectly by investing in the PowerShares DWA Basic Materials Momentum ETF (PYZ), which has invested 3.3% of its holdings in Ashland. The other holdings of the fund include Chemours (CC), FMC (FMC), and Albemarle (ALB) with weights of 4.9%, 4.6%, and 4.0%, respectively, as of September 22, 2017.


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