SOURCE: Paragon Financial Limited
NEW YORK, NY--(Marketwire - Oct 10, 2012) - Companies in the Chemicals Industry dipped Monday after an analyst warned the recent surge in natural gas prices could have a negative impact on fourth quarter earnings results. Data from FactSet have shown natural gas prices have gained approximately 21 percent since the end of August. The Paragon Report examines investing opportunities in the Agricultural Chemicals Industry and provides equity research on The Dow Chemical Company (NYSE: DOW) and Monsanto Company (NYSE: MON).
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According to Citi Research analyst P.J. Juvekar natural gas makes up 60 to 80 percent of cash costs as it is used as a feedstock to make ammonia, and as a fuel to generate power for chlor-alkali or methanol. Since hitting a record low in mid-April natural gas futures have soared nearly 77 percent.
"If high gas costs are sustained, there could be some modest margin pressure starting in 4Q (fourth quarter), but this does not alter our positive view on nitrogen ahead of... corn planting season in the U.S. in 2013," he wrote.
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Dow's diversified industry-leading portfolio of specialty chemical, advanced materials, agrosciences and plastics businesses delivers a broad range of technology-based products and solutions to customers in approximately 160 countries. In 2011, Dow had annual sales of $60 billion.
Monsanto is a leading global provider of technology-based solutions and agricultural products that improve farm productivity and food quality. Monsanto remains focused on enabling both small-holder and large-scale farmers to produce more from their land while conserving more of our world's natural resources such as water and energy. The company reported net sales for the full fiscal year were $13.5 billion, a 14 percent increase over fiscal year 2011.
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