Chems plunge as US Dow Jones Industrial Average sinks 483 points

18 August 2011 15:59  [Source: ICIS news]

US stocks fallHOUSTON (ICIS)--Stocks in North American chemical companies fell steeply on Thursday as the Dow Jones Industrial Average fell by nearly 483 points, following a pessimistic US unemployment report.

The index fell to 10,927.61 as of 10:43 hours New York time (14:43 GMT), down 4.23%.

The plunge followed a report released by the US Department of Labor, which showed that 408,000 people filed for jobless claims for the week ending 13 August, up 9,000.

Unlike recent days with wide swings, many stocks in North American chemical companies performed worse than the Dow Jones Industrial Average.

None of the companies followed by ICIS rose in morning trading.

Catalyst producer Albemarle was among the biggest losers, falling by nearly 12%. Butadiene (BD) producer TPC Group fell 10%. 

Many others were down by more than 7%, including specialty chemicals producers Rockwood Holdings, Solutia and Chemtura; acetyls producer Celanese; and titanium dioxide (TiO2) producer Kronos.

Lubricants additives producer Lubrizol and specialty chemicals producer Arch Chemicals fell the least, dropping by less than 1%. Both, however, are being acquired.

Outside of the acquisition targets, base oils producer Calumet suffered the least damage in early trading, falling 1%.

Among the majors, Dow Chemical dropped by 7% and DuPont fell 5%.

Industrial gases producer Praxair was off by 5% and fertilizer producer PotashCorp nosed down 4%.

US chemical stocks had been performing better than the market as some consultants and economists expected that the nation's feedstock advantage could help the industry weather a slowdown in the economy.

Unlike much of the world, US chemical producers rely mostly on ethane and other natural gas liquids (NGLs) as feedstocks versus oil-derived naphtha.

The advent of shale gas has increased production of NGLs.

However, Laurence Alexander, analyst with US-based investment bank Jefferies & Co, has cut 2012 earnings per share estimates on chemical companies across the board, but still expects profit growth versus 2011.

He noted that leading indicators “suggest downside risk to 2012 consensus, consistent with a ‘soft patch’ rather than a global recession”.

Additional reporting by Joseph Chang

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

By: Al Greenwood
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