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APD: Industrial Gas Prices Will Increase in North America

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Price increase

On September 17, Air Products and Chemicals (APD) announced that it’s increasing the prices of its liquid and bulk industrial gases. The price increase will only impact the North American region. The price increase will be effective on October 1. Below is the list of products that will have a price increase:

  • Liquid and bulk hydrogen prices will increase up to 25%.
  • Liquid argon prices will increase up to 20%.
  • Liquid nitrogen and oxygen will increase up to 15%.
  • Liquid carbon dioxide and monthly service charges are expected to increase up to 10%.

Air Products and Chemicals is also expected to increase its helium prices. However, the company didn’t specify the amount of the price increase. Air Products and Chemicals said that the increase would be based on supply and demand. The price increase could also be customer specific. Air Products and Chemicals said that the increased product prices could be due to higher production and delivery costs, increased sourcing, and more safety and security investments.

The impact of the price increase will be more visible for Air Products and Chemicals in the first quarter of 2019. Air Products and Chemicals follows October 1–September 30 as its financial year.

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Stock price update

Air Products and Chemicals (APD) stock gained 1.2% and closed at $170.61 for the week ending September 21. As a result, Air Products and Chemicals traded 4.8% above its 100-day moving average price of $162.82, which indicates a prevailing upward trend in the stock.

Air Products and Chemicals extended its YTD (year-to-date) gain to ~3.1%. Praxair (PX) and Eastman Chemical (EMN) have gained 6.6% and 6.6%, respectively. International Flavors and Fragrances (IFF) has declined ~9.1% YTD.

Analysts are bullish on Air Products and Chemicals stock and have projected a target price of $190.9. The target price implies a return potential of 11.9% from its closing price on September 21. The company’s 14-day relative strength index of 68 indicates that the stock is close to being “overbought.”

Investors could hold Air Products and Chemicals indirectly through the Materials Select Sector SPDR ETF (XLB), which invested 6.25% of its portfolio in Air Products and Chemicals on September 21. XLB gained ~1.9% for the week.

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