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Praxair to Buy Helium from Castleton, Shares Up 1.4%

Industrial gas producer and supplier Praxair Inc.PX recently signed a long-term agreement with Castleton Commodities International for refining and purchasing helium from the latter. Financial terms of the contract were, however, kept under wraps. We believe Praxair's efforts to expand its helium sourcing in the U.S., with this contract being the second of its kind in September, has led to a 1.4% gain in the company's share price on Sep 29.

Castleton Commodities International operates a gas processing facility and helium refinery in Utah. The refinery is capable of producing roughly 150 million cubic feet of liquid helium annually. The contract will enhance Praxair's helium-supply capabilities, thereby helping it meet the growing global demand for the product.

Earlier in the month, Praxair had signed a long-term agreement to source approximately 100 million scf of helium annually from Nacogdoches Oil & Gas' helium-bearing gas field in Apache County, AZ.

We believe such expansionary initiatives will help Praxair mete out justice to the growing preference of customers for its world-class products and services. Also, increasing use of industrial gases in manufacturing, transportation, healthcare, food & beverages, and metal fabrication industries will prove to be a boon for industrial gas producers. Particularly, helium is used in magnetic resonance imaging, fiber optic and semiconductor manufacturing, lifting for blimps and balloons, automobile airbags and leak detection.

However, despite bright prospects, certain near-term headwinds continue to weigh on Praxair's performance. The stock currently carries a Zacks Rank #3 (Hold) with a market capitalization of $28.8 billion.

Better-ranked stocks in the chemical diversified industry include Arkema S.A. ARKAY , Koppers Holdings Inc. KOP and Air Products & Chemicals Inc. APD . While both Arkema S.A. and Koppers Holdings sport a Zacks Rank #1 (Strong Buy), Air Products & Chemicals carries a Zacks Rank #2 (Buy).

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PRAXAIR INC (PX): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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