Show 1 1 1 f I V l J f 1 11 Ul 4 H jB Sl FH PACE FOR HEAVY ALS The heavy or basic chemicals are the building blocks of the chemical In- Since there is little difference between the products of the companies this profits are determined largely by more efficient processes and the source of raw which are usually crude natural and natural gas profit margins are generally narrower than for other chemicals such as chemical byproducts and speciality Basic chemical producers are en- countering stagnant domestic demand plus fierce foreign They are by excess of labor and raw and higher manufacturing marketing The severe cost-price squeeze the chemical com- are experiencing is difficult to offset in the face of the overcapacity and rising amount of cheap The managements are reining in their expansion p cutting back generally of the principal and product mix to pro- or higher value-added items in 0 attain a more favorable demand-supply Over the next few years these in the opinion of the Research Depar ment of Babson's should alleviate many of the But me chemical industry which is closely tied to the national will still be affected bv the in and fr 1980 38 There inere was was a a cyclical rebound rebound during 1977 reaching a peak about the middle oi of the ine vear Alter After a a second-hail second half a surprising and significant advance has been seen in profits thus far in It should be however that much of the increase for chemical companies this year it is been generated by hedge-buying by customers who are anxious to beat future price hikes anticipated as a result of higher interest rates and Babson n k this s views production up- surge as temporary because the pro- discussed above still exist and no until after It seems that the tighter business and an increased shift in product mix to higher value-added chemicals will help the producers of heavy chemicals participate more fully in the next upturn in the business cycle Also on the plus side should be the possible development of lower-cost energy sources as well as the installation of manufacturing processes involving a greater degree of lZ u market action up to this the Research Staff of Reports Is of the opinion that they still could be among market m the early stages of the next cyclical up- turn for the For this rea d ile fact t are spotty over Babson's mends retention of the securities of the manufacturers of sic chemicals held by moreover n meni These are Cor- Mrm and Chemical Com- both of which appear to have at- long-term appreciation poten- lial- has an established position in basic commodity-type specialized process equipment and health and dental Stauffer management has entrenched its com- in food ad- and a variety of specialty Up-to-date reports on these com- are traded on the New York Stock may be obtained free of charge by writing to Babson's Wellesley |