Blockade of the Hormuz Strait. Deliberately choosing chemical stocks now

Shin-Etsu Chemical Industry Co., Ltd. (4063)

Current state and strengths: While concerns about PVC production rise in Asia, having production bases in the United States allowscosts of raw material procurement to be kept low, placing the company in a relatively advantageous position.
Future expectations: If it can export competitively priced U.S.-made PVC to Asia and other regions, further performance improvements are expected.
Price revision: In the background of difficulties in procuring ethylene, the company is implementing price increases for plastic products.

Business structure: Housing and healthcare businesses, including pharmaceuticals, generate most of the profits.
Competitive advantages: Low dependence on petrochemical businesses makes it relatively less affected by rising resource prices or supply shortages.

Focus areas: Strong in semiconductors and electronic materials, especially materials used in the “back-end” stages.
Specific products: Copper-clad laminate for substrates and insulation/adhesive films for wide-band memory (HBM) used in next-generation memory, among other products with growing demand.

Risk factors: High dependence on petroleum-derived raw materials and products’ sales, so prolonged supply difficulties could severely impact performance.

Price revision: To respond to soaring raw material prices, the company is raising prices for products such as tablet packaging plastics.

Outlook: Even with elevated crude oil prices, the company is expected to be a good candidate in semiconductors and electronic materials. Lintec, a leading adhesive paper maker, is also viewed as having potential for future developments.