Scoop Up These 4 Chemical Stocks For Stellar Returns

Total chemical exports went up 4.9% to $127 billion in 2017 while imports rose 2.8% to $96 billion, the trade group noted.

The trade group also expects basic chemicals production to increase 4.7% in 2018 and 5.2% in 2019 on the back of new capacity additions. Major export markets such as Latin America and Asia are expected to play a significant role in production growth.

Robust Demand Across Key-End Markets

Chemical makers continue to see strong demand from construction and automotive sectors – major chemical end-use markets. A recovery across housing and commercial construction markets has been a tailwind for the chemical industry. The underlying trends in the housing space remain healthy, backed by steady buyer demand, low mortgage rates, high homebuilders’ confidence, low unemployment levels and rising rent costs.

The automotive sector also continues its bullish run amid certain challenges, supported by an improving job market, rising personal income, improved consumer confidence, low fuel prices, impressive vehicle launches and attractive financing options.

Last year, gains in specialty chemicals were led by improvements in adhesives, oilfield and mining chemicals and electronic chemicals. Production in the segment is expected to grow 2.3% in 2018.

Another positive for the industry is a recovery in demand in the energy space – a key chemical end-market that had been out of favor for a while. The recovery has been driven by the rebound in crude oil prices. The recent uptrend in oil prices has been supported by a decline in U.S. oil stockpiles and extension of oil production cuts by OPEC and other major world producers until the end of 2018. Improving fundamentals in the energy space is expected to support chemical demand next year.

4 Chemical Stocks to Scoop Up

The U.S. chemical industry’s upturn is expected to continue this year on the back of continued demand strength across major end-markets and significant capital investment. Amid such a backdrop, it would be a prudent idea to invest in chemical stocks with compelling growth prospects if you are looking to reap solid returns from your portfolio in 2018.

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Disclosure: Zacks.com contains statements and statistics that have been obtained from sources believed to be reliable but are not guaranteed as to accuracy or completeness. References to any ...

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