Chems crash again as US Dow Jones Industrial Average falls 635 pts

08 August 2011 21:36  [Source: ICIS news]

HOUSTON (ICIS)--North American chemical stocks sank on Monday ­– the second time in less than a week ­– as the Dow Jones Industrial Average fell by nearly 635 points.

The Dow Jones closed at 10,809.85, down by 5.55%. It was the largest drop since the 680-point fall in December 2008.

Monday was the second day in less than a week that the Dow Jones fell by more than 500 points. On Thursday, the index fell by 513.

As on Thursday, many North American chemical stocks fell much more than the Dow Jones.

Every North American company followed by ICIS fell, including Lubrizol and Arch Chemicals, both of which are in the midst of being acquired.

Several companies fell by more than 10%, including acetyls producer Celanese; catalyst producer WR Grace; polyurethanes producer Huntsman; titanium dioxide (TiO2) producer Kronos; refiner and petrochemical producer LyondellBasell; compounders PolyOne and A Schulman; specialty chemicals producers Chemtura, Rockwood and Solutia; refiners Sunoco and Valero; and polyolefins producer Westlake Chemical.

Among the majors, Dow Chemical fell by 10% and DuPont fell by nearly 7%.

Industrial gases producer Praxair fell by 5%. Fertilizer producer PotashCorp fell by 7%.

The biggest loser was the compounder Spartech, which fell 19%.

Lubricant additives producer Lubrizol fell by the least, 0.53%. It is being acquired by Berkshire Hathaway.

The declines came after Standard & Poor's (S&P) downgraded the credit rating of the US to AA+ from AAA. Afterwards, S&P downgraded Fannie Mae and Freddie Mac, the nation's mortgage finance agencies.

A speech on Monday by President Barack Obama did little to calm markets.

The US, though, is contending with more than just the credit downgrade. A series of pessimistic economic reports increased concerns that the nation could fall into another recession.

The market rout began in Asia, where Japan's Nikkei 225 index fell 2.18%. The Shanghai Composite index dropped by 3.79%.

In Europe at 16:21 GMT, the UK's FTSE 100 had fallen by 1.93%, Germany’s DAX was down 2.26%, while the CAC 40 in France was down by 2.46%.

The European Central Bank’s (ECB's) decision on Sunday to buy Italian and Spanish bonds appeared to have had little positive impact in an extremely nervous market environment.

The ECB said on Sunday it would step into the bond markets to ensure eurozone price stability. It was expected to buy Spanish and Italian debt.

Additional reporting by Pearl Bantillo and Franco Capaldo.

Paul Hodges studies key influencers shaping the chemical industry in Chemicals and the Economy

By: Al Greenwood
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