Huntsman Corporation (HUN), Tronox Ltd (TROX): Three Reasons This Chemical Giant Is Poised to Head Higher

Considering that Research and Markets’ latest report projects the global MDI market to grow at a compounded rate of 6% through 2016, Huntsman looks to be doing the right thing by expanding its polyurethanes business. After acquiring 20% stake in Japan-based foam-insulation company Nippo Aqua in March, Huntsman will soon take over Texas-based insulation-component maker Oxid.

But the real deal that could change Huntsman’s fortunes is the joint venture it entered into with China-based Sinopec Jinling last year. The two companies are jointly building a propylene oxide facility in China, targeting completion by the end of 2014. Propylene is a key input for polyurethanes.

The Sinopec deal should help Huntsman deepen its foothold in the critical Asia-Pacific market, especially at a time when rival The Dow Chemical Company (NYSE:DOW) is also eying a share of the pie. The Dow Chemical Company (NYSE:DOW) is setting up one of the world’s largest petrochemical facilities in Saudi Arabia in collaboration with Saudi Aramco. The plant will primarily deal in polyurethanes, and will aim to sell half of the production to customers in the Asia-Pacific region. Projected to be fully operational by 2016, the facility will target annual revenue of $10 billion. To give you an idea of how big that would be, Huntsman’s total revenue from its polyurethanes business in 2012 was $4.9 billion.

The article 3 Reasons This Chemical Giant Is Poised to Head Higher originally appeared on Fool.com is written by Neha Chamaria.

Fool contributor Neha Chamaria has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.