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May 6, 2005

Mr. Rufus Decker

Accounting Branch Chief

Division of Corporation
Finance

United States Securities
and Exchange Commission

Washington, D.C. 20549

Re:                               KMG
Chemicals, Inc.

Form 10-K
for the fiscal year ended 2004

Form 10-Q
for the period ended January 31, 2005

SEC
File No. 0-29278

Dear Mr. Decker:

KMG
Chemicals, Inc. (“KMG”)
submits the following responses to your letter dated March 31, 2005,
containing comments from the staff of the Securities and Exchange Commission
relating to KMG’s Form 10-K for the year ended July 31, 2004 and Form 10-Q
for the period ended January 31, 2005.
In this letter, KMG has reproduced your comments in bold, italics
typeface, and has made its responses in normal typeface.

FORM 10-K
FOR THE YEAR ENDED JULY 31, 2004

Comment
applicable to your overall filing

1.              Where
a comment below requests additional disclosures or other revisions to be made,
please show us in your supplemental response what the revisions will look
like.  These revisions should be included
in your future filings.

Response:  We have shown below in our supplemental
responses the proposed revisions to be included in future filings.

Management’s Discussion and Analysis

2.              We
note that you summarize quarterly financial information in Note 14.  Please discuss any seasonal aspects of your
business which have had a material effect on your financial condition or
results of operation.  See instruction 5
to Item 303(b) of Regulation S-K and paragraph 30(c) of APB 28.

Response:  The following additional disclosure is
provided, and we propose to include comparable information in our future
filings:

Sales
of our animal health pesticides and our agricultural chemicals are seasonal,
and occur primarily in the second half of our fiscal year.  Seasonal usage follows varying agricultural
seasonal patterns, weather conditions and weather related pressure from pests,
and customer marketing programs and requirements.  Weather patterns can have an impact on our
sales, particularly sales of agricultural products.  The end user of some of our products may,
because of weather patterns, delay or intermittently disrupt field work during
the planting season which may result in a reduction of the use of some products
and therefore reduce our revenues and profitability.  The combined revenues from products subject
to seasonal variations, however, represent less than 20% of our total annual
revenues.

Results
of Operations, page 14

3.              Please
disclose the extent to which acquisitions, changes in prices, amounts of
shipments, or the introduction of new products contributed to fluctuations in
revenues.  Refer to Item 303(a)(3)(iii) of
Regulation S-K.

Response:  We estimate that acquisitions completed in
fiscal 2004 added approximately $4.4 million of revenues; however, it is difficult
to precisely distinguish the increase between increases in demand and impacts
of acquisitions.  We propose to include
information similar to the following in future filings:

Net
sales revenue increased 23% in fiscal 2004 over fiscal 2003.  More than half of the increase came from
increased pentachlorophenol (penta) sales.
Penta products are used principally to treat utility poles.  Penta volume was up significantly for the
year due to the acquisition of the penta distribution business of Wood Protection
Products, Inc. in December 2003, which we estimate had an impact on
revenue of approximately $3.9 million.
Penta sales revenue also improved over the prior year because of our June 2003
penta price increase which had an impact of approximately $1.1 million.

4.              Please
quantify the impact of each factor when multiple factors contribute to material
fluctuations.  For example, selling,
general and administrative expenses increased in fiscal 2004 due to the
acquisition of the Wood Protection Products distribution business, increased
amortization of the cost of your animal health and penta acquisitions, and
compensation of new personnel to support those acquisitions; please quantify
each of these factors.  Refer to Item
303(a)(3)(i) of Regulation S-K and Financial Reporting Codification
501.04.

Response:  Distribution expenses associated with our
wood treating products increased $670 thousand and selling expense increased
$167 thousand in 2004 primarily due to the volume increases discussed above.  Amortization expense increased $164 thousand
and regulatory support expenses increased $156 thousand, in each case primarily
as a result of our completed acquisitions.
Comparable disclosures will be made in future filings.

5.              Your
discussion of gross profit on page 15 indicates that you starting
reselling penta blocks in December 2003 after signing a long term supply
agreement.  Please disclose how you
report these revenues and corresponding costs of sales given the provisions of
EITF 99-19.

Response:  We do not resell the penta blocks we purchase
from our additional supplier.  Those
blocks are shipped to our formulating facility, where they are dissolved in a
solvent and formulated into a liquid concentrate.  From that facility, the liquid concentrate is
sold to our customers.  Revenues from
liquid concentrate sales are recorded on a gross basis.  The cost of the penta blocks is included in
the cost of goods sold.  We believe this
accounting is appropriate under EITF 99-19 based on the following:

•                  We act as the principal in the sales
transactions.

•                  We take title to the penta blocks and
modify them in our production process.

•                  We have the risks and rewards of
ownership.

•                  We do not act as an agent or broker.

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Liquidity
and Capital Resources

Contractual
Obligations, page 19

6.              Please
revise your table of contractual obligations to include the following:

•                  Estimated interest payments on your
debt;

•                  Estimated payments under interest
rate swap agreements; and

•                  Planned funding of pension and other
postretirement benefit obligations.

Because the table is aimed at increasing
transparency of cash flow, we believe these payments should be included in the
table.  Please also disclose any
assumptions you made to derive these amounts.

Response:  A revised table of contractual obligations is
attached to this letter (Attachment 1), which includes estimated interest
payments and payments under the interest rate swap agreement.  Planned funding of post-retirement benefits
is included in the “Other long-term liabilities” line item in the table.  We will include this information in future
filings.

Financial
Statements

7.              Please
display comprehensive income and its components in a financial statement, which
should have the same prominence as other financial statements.  Refer to paragraph 22 of SFAS 130.

Response:  A separate line of total comprehensive income
was not included as the components other than net income have historically been
immaterial (individually and in the aggregate less than 5% of net income for
all periods presented); however, we note the Staff’s comment.  In future filings, we will include a line to
our Statement of Stockholder’s Equity displaying total comprehensive income.

Note
1, Summary of Significant Accounting Policies, page 29

8.              Please
disclose the types of expenses that you include in the cost of sales line item
and the types of expenses that you include in the selling, general and
administrative expenses line item.
Please tell us whether you include inbound freight charges, purchasing
and receiving costs, inspection costs, warehousing costs, internal transfer
costs, and the other costs of your distribution network in the cost of sales
line item.  With the exception of
warehousing costs, if you currently exclude a portion of these costs from cost
of sales, please disclose:

•                  in a footnote the line items that
these excluded costs are included in and the amounts included in each line item
for each period presented, and

•                  in MD&A that your gross margins
may not be comparable to those of other entities, since some entities include
all of the costs related to their distribution network in cost of sales and
others like you exclude a portion of them from gross margin, including them
instead in a line item, such as selling, general and administrative expenses.

Response:  The following additional disclosure is
provided, and will be included in Note 1 (Summary of Significant Accounting
Policies) of our future filings:

“Cost
of Sales – Cost of sales includes inbound freight charges, purchasing and
receiving costs, inspection costs and internal transfer costs.  In the case of products manufactured by the

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Company,
direct and indirect manufacturing costs and associated plant administrative
expenses are included as well as laid-in cost of raw materials consumed in the
manufacturing process.

Selling,
General and Administrative Expenses – These expenses include selling expenses,
product storage and handling costs and the cost (primarily common carrier
freight) of distributing products to the Company’s customers.  Corporate headquarters’ expenses,
amortization of intangible assets and environmental regulatory support expenses
are also included.”

In our
period to period discussion of “Gross Profit” and “Selling, General and
Administrative Expenses” in Management’s Discussion and Analysis of Financial
Condition and Results of Operations, we will comment that other companies may
include certain of the costs that we record in cost of sales in selling,
general and administrative expenses, and may include certain of the costs that
we record in selling, general and administrative expenses as cost of sales,
resulting in a lack of comparability between our gross profit and that reported
by other companies.

Foreign
Currency Translation, page 30

9.              Given
the guidance provided in paragraphs 5 through 8 of SFAS 52, tell us how you
determined it is appropriate to use the U.S. dollar amount as the functional
currency for each of your foreign operations.
Also, please tell us how your accounting of KMEX, which is discussed in
Note 5, complies with SFAS 52.

Response:  We considered the functional currency of KMEX
in accordance with paragraphs 5 through 8 and Appendix A of SFAS 52 as follows:

•                  Cash flow indicators - Cash flows
related to KMEX’s individual assets and liabilities directly impact the parent’s
cash flows on a current basis and are readily available for remittance to the
parent company.

•                  Sales price indicators – KMEX mainly
produces goods that are sold into the U.S. (only about 3% of the revenue
derived from its production is sold in Mexico).and are principally determined
by the pricing in the U.S. as opposed to local competition or regulation.

•                  Sales market indicators – As noted
above, the sales market is substantially all located in the U.S. and
denominated in U.S. dollars.

•                  Expense indicators – Labor and local
operating costs are denominated in local currency.  Over 90% of the raw materials KMEX purchases
for its production is U.S. dollar denominated.

•                  Financing indicators – KMEX does not
have independent financing.  Rather,
financing for KMEX is arranged on a consolidated basis in the U.S.

•                  Intercompany transactions and
arrangements indicators - KMEX is an integral extension of its parent’s
operation.

After
considering these factors, we concluded that the U.S. dollar is the functional
currency for the operations of KMEX.

Accounts
for KMEX are maintained in the local currency and are re-measured into U.S. dollars
in accordance with paragraph 10 and Appendix B of SFAS 52, under which
historical exchange rates are used to re-measure certain accounts (i.e.,
property and related depreciation), with the current exchange rate used to re-measure
all other accounts, with the gain or loss on re-measurement of monetary assets
recognized currently in income.

Segment
Reporting, page 31

10.       Given
the manner you present yourself in Item 1 (Business) in which you discuss
entering into three different types of businesses (wood preserving chemicals,
animal health

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pesticides, and agricultural chemicals)
through acquisitions, it appears that may have aggregated certain operating
segments in arriving at your reportable segment.  If you have aggregated operating segments,
please explain to us how these operating segments meet the aggregation criteria
of paragraph 17 of SFAS 131.  Please help
us understand how you determined you have one reportable segment under SFAS
131.

Response:  The Company has three product lines – wood
preserving chemicals, animal health pesticides and agricultural chemicals.  The results of these product lines are
evaluated regularly by the chief operating decision maker in deciding how to
allocate resources and assessing performance.
These product lines have been aggregated into one reportable segment
under SFAS 131 based on the following:

•                  The nature of the products are
similar – All of our products are chemical products registered as biocides
under the Federal Insecticide Fungicide and Rodenticide Act .

•                  The nature of the production
processes – The manufacturing process for each product is a comparable,
relatively simple chemical synthesis.

•                  The type or class of customer for the
products - Our products are sold to distributors who are licensed to handle
such products.

•                  The methods used to distribute the
products – Each product is supported by the same personnel for distribution,
accounting, customer service, regulatory, sales management and manufacturing.

•                  The nature of the regulatory
environment – As noted above, our products are each registered as biocides
under the Federal Insecticide Fungicide and Rodenticide Act.  As such, they are all regulated under the
same regulatory regime by the United States Environmental Protection Agency
(EPA).

Based
on these considerations, we believe we have one reportable segment.  We propose to include the following language
in future filings: “We operate in one reportable segment, which consists of
three product lines – wood preserving chemicals, animal health pesticides and
agricultural chemicals.  These product
lines have been aggregated into one segment because they have similar economic
characteristics, and the production processes, distribution methods and regulatory
regimes are similar.”

Note
2.  Acquisitions, page 32

11.       Given
the purchase price of the Wood Protection Products acquisition was $7.2
million, which represents approximately 22% of your total assets at July 31,
2003, please help us understand how you determined you did not need to provide
any financial statements of businesses acquired pursuant to Rule 3-05 of
Regulation S-X.

Response:  We believe that the Wood Protection Products
(WPP) acquisition was not the acquisition of a business within the meaning of
Item 11-01(d)  of Regulation S-X.
We did not acquire WPP’s physical location.  No employees of WPP were hired in the
acquisition, although one person was hired later.  No duplicate market distribution system was
acquired.  No customer lists, marketing
material, or intellectual property (other than pesticide registrations) were
acquired.  We did not acquire the WPP
trade name.  We primarily acquired WPP’s
pesticide registrations for penta products and a non-compete agreement from WPP
and its principal owner.

12.       In
June 2004, you purchased creosote product registrations as well as the
Ravap tradename and inventory.  Tell us
how you accounted for these transactions.
Your explanation should refer to the accounting guidance used to
determine