Chems soar, Dow Jones up 11%, as US gets closer to stimulus deal

Author: Al Greenwood


HOUSTON (ICIS)--US-listed shares of chemical companies rose as the Dow Jones Industrial Average increased by more than 11% as lawmakers came closer to passing a stimulus bill.

The deal, worth nearly $2trn, could be passed by Congress later in the day. The US is either in a recession or it will enter one as a result of the economic damage caused by the coronavirus (Covid-19).

The table below shows the major indices followed by ICIS.

24-Mar Change %
Dow Jones Industrial Average 20,704.91 2,112.98 11.37
S&P 500 2,447.33 209.93 9.38
Dow Jones US Chemicals Index 438.91 43.74 11.07
S&P 500 Chemicals Industry Index 447.92 46.04 11.46

Measures intended to slow down the spread of the coronavirus in the US are slowing down the economy.

The following shows the number of US cases.

US 23-Mar 24-Mar
Cases 33,404 44,183
Death 400 544
States 50 50

Source: US Centers for Disease Control and Prevention (CDC)

The following shows global cases.

World 23-Mar 24-Mar
Cases 332,930 375,498
Death 14,510 16,362

Source: World Health Organization

Phillips 66 said the coronavirus is destroying gasoline demand around the world.

Axalta Coating Systems has withdrawn its previous financial guidance for 2020.

Meanwhile, the oil industry is contending with a decline in demand caused by the coronavirus and a price war between OPEC and Russia.

Oil prices remain depressed, with Brent rising slightly to $27.15/bbl from $27.03/bbl. It is still well below levels from the start of the year.

Chevron, Phillips 66 and Sunco have responded by cutting capital expenditures.

Enlink Midstream is cutting its dividend.

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.

In addition, petrochemical and polymer prices tend to follow crude oil with a time lag of about six weeks, according to the ICIS Petrochemical Index (IPEX). The index tracks 12 major pretrochemicals and polymers.

US April nominations for butadiene (BD) are sharply lower.

Prices for US toluene and mixed xylenes (MX) fell below $1/gal, reaching 18-year lows.

In Europe, March spot prices for benzene fell by over 50% since Monday.

In the eurozone, March business activity in the eurozone collapsed to its lowest level on record, IHS Markit said.

INEOS is delaying the shutdown of the Forties Pipeline System to prevent the coronavirus from spreading among work crews.

The following shows the US-listed chemical shares followed by ICIS.

$ Current
$ Change % Change
AdvanSix 10.42 -1.30 -11.09
Axalta Coating Systems 14.80 1.13 8.27
Braskem 4.53 0.67 17.36
Celanese 66.96 4.76 7.64
Dow 28.17 1.59 5.98
DuPont 32.52 4.06 14.27
Eastman 41.60 3.21 8.36
HB Fuller 26.78 1.50 5.93
Huntsman 13.73 0.86 6.68
Ingevity 31.12 2.40 8.36
Kraton 4.81 0.15 3.11
Kronos Worldwide 8.16 0.45 5.84
LyondellBasell 45.04 4.55 11.24
Methanex 11.47 1.90 19.85
NewMarket 342.49 -0.33 -0.10
Olin 10.21 0.29 2.87
PolyOne 16.65 1.43 9.40
PPG 81.84 9.34 12.88
RPM International 53.78 6.97 14.89
Sherwin-Williams 452.70 56.00 14.12
Stepan 84.02 4.21 5.28
Chemours 9.43 1.22 14.86
Trinseo 18.82 1.05 5.91
Tronox 5.04 0.38 8.05
Univar 10.44 1.64 18.58
Venator Materials 1.72 -0.07 -3.91
Westlake Chemical 37.62 5.61 17.51

Visit the ICIS coronavirus topic page for analysis of the impact on chemical markets and links to latest news.

(adds tables showing coronavirus cases in the US and the world)