NEW YORK (AP) — A Jefferies analyst said Wednesday that chemical companies that make styrene could suffer following its addition to the government's list of cancer-causing chemicals, but the food industry and manufacturers will still need them.
Analyst Laurence Alexander said in some cases there are few alternatives to styrene.
"Styrene remains one of the most common plastics found in foodservice," Alexander said. The chemical "is used because of its unique properties, particularly as insulation, for a variety of products such as coffee cups, egg cartons, yogurt containers, fast food trays and takeout containers."
Earlier this month, the National Institutes of Health said styrene could cause cancer. Styrene producers are mounting a campaign against the listing, and the Food and Drug Administration says the chemical is safe to use in contact with food, Alexander said.
Alexander said styrene makers Omnova Solutions Inc. and LyondellBasell Industries NV could still suffer from negative market reaction to the government's listing. But he maintained a "Buy" rating for both companies. Omnova, which makes a latex product for paper coatings and carpets, isn't challenged by an effective competing product. LyondellBasell's styrene is mainly a by-product of a much more profitable chemical, Alexander said.
Shares of Omnova gave up 26 cents, or 3.2 percent, to $8 and LyondellBasell dropped 88 cents, or 2.2 percent, to $39 per share in midday trading.