Regulatory Risks and Opportunities for Specialty Chemicals Companies: Expert Analyst Chris Kapsch Discusses the Effects of the EPA's Renewable Fuel Standard and Mercury and Air Toxics Standards

July 24, 2013

67 WALL STREET, New York - July 24, 2013 - The Wall Street Transcript has just published its Agricultural & Specialty Chemicals Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs and Equity Analysts. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Crop Yield Management - U.S. Corn Crop - Chemicals Companies Pricing Power - Fertilizers, Paints and Coatings, and Petrochemicals - Emerging Market Demand - Specialty Chemicals and Fertilizer Pricing Power

Companies include: Avery Dennison Corporation (AVY), Monsanto Co. (MON), W.R. Grace & Co. (GRA), Hexcel Corp. (HXL), American Vanguard Corp. (AVD), Polypore International Inc. (PPO), OM Group Inc. (OMG), Albemarle Corp. (ALB) and many more.

In the following excerpt from the Agricultural & Specialty Chemicals Report, an expert analyst discusses the outlook for the sector for investors:

TWST: What big regulatory risks and opportunities are on the horizon for specialty chemicals companies?

Mr. Kapsch: On the risk side, and in wake of last year's drought-induced inflation in corn prices, some investors in agriculture-related equities are wary that the EPA's Renewable Fuel Standard could be modified or curtailed, potentially reducing the mandate-driven demand for ethanol, and in turn undermining the demand and price for corn. From what we have gleaned, however, we view this scenario as highly unlikely.

On the opportunity side, the EPA's Mercury and Air Toxics Standards, or MATS Rule, under the Clean Air Act mandates reduced mercury and other toxic emissions from coal and oil-fired power plants. One mercury abatement compliance solution entails selective catalytic reduction, or SCR, with a bromine-based oxidizing agent, creating a meaningful growth opportunity for integrated bromine producers including Albemarle (ALB) and Chemtura (CHMT).

A similar opportunity exists longer term in China, as growth in coal-fired power production expands over time, and as China continues to adopt more stringent environmental and emissions standards.

TWST: What is the level of investor interest in specialty chemicals at the moment, and do you think investors are correctly assessing the opportunities for investment in this sector?

Mr. Kapsch: The specialty chemical industry remains highly fragmented and eclectic in nature, and therefore investment themes are very company and stock-specific. Currently, there is a disparity across the valuation spectrum across the group, with investors gravitating to those names whose end markets have sustainable demand characteristics or that exhibit fundamentals with sustainable demand characteristics, such as aerospace or those that are exposed to end markets where...

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.