HOUSTON (ICIS)--Shares of US-listed chemical companies continued to fall on Monday as the nation's upper legislative chamber continued to negotiate a $2trn aid bill intended to offset the economic disruptions caused by the coronavirus (Covid-19).
The table below shows the major indices followed by ICIS.
|Dow Jones Industrial Average||18,591.93||-582.05||-3.04|
|Dow Jones US Chemicals Index||395.17||-21.88||-5.25|
|S&P 500 Chemicals Industry Index||401.88||-21.13||-5.00|
While lawmakers debated the aid bill, the coronavirus continues spread rapidly in the US and the rest of the world.
The following shows the spread in the US.
Source: US Centers for Disease Control and Prevention (CDC)
The following shows global cases.
|World||23-Mar||Change from Sunday|
Source: World Health Organization (WHO)
The coronavirus has already caused Cooper Tires and Michelin to suspend some of their North America tyre operations. Tyres are made with styrene butadiene rubber (SBR) and carbon black.
For the oil industry, it is contending with a decline in demand caused by the coronavirus and a price war between OPEC and Russia.
Oil prices rose slightly, as shown in the following table.
|Brent||$27.03||+ 5 cents|
|WTI||$23.36||+ 73 cents|
Despite the rise, both benchmarks are down sharply from 6 March, when Russia and OPEC failed to reach a production-cut agreement.
US chemical producers are vulnerable to low oil prices because they rely overwhelmingly on ethane and other natural gas liquids (NGLs) as feedstocks.
As a result, US producers lose their cost advantage when oil prices fall in relation to gas. By contrast, much of the world stands to benefit, because they rely on oil-based naphtha.
The following shows the US-listed chemical shares followed by ICIS.
|$ Change||% Change|
|Axalta Coating Systems||13.67||-1.12||-7.57|
In Europe, chemicals prices and stocks opened the week with losses. Naphtha prices took a big hit from crude’s continued losses.
UK prime minister late on Monday announced a three-week stay-at-home order, saying people can only leave their homes for basic necessities, one form of exercise, any medical need to provide care or help a vulnerable person, and travel to and from work only if absolutely necessary and if the work cannot be done from home.
To ensure compliance, the county will stop public gatherings of more than two people and close all shops selling nonessentials goods, including libraries, playgrounds and outdoor gyms.
The police will have the powers to enforce the rules, including issuing fines and dispersing gatherings.
Visit the ICIS Coronavirus topic page for analysis of the impact on chemical markets and links to latest news.
Thumbnail image by CHINE NOUVELLE/SIPA/Shutterstock
(recasts with updates on UK lockdown)