US chem shares mixed as oil prices reach 18-year lows

HOUSTON (ICIS)–Shares of US-listed chemical companies were mixed on Monday as oil prices reached 18-year lows.

Brent crude oil futures for May settled at $22.76/bbl, down by $2.17/bbl. WTI settled at $20.09/bbl, down by $1.42/bbl.

US stock markets rose, as shown below by the indices followed by ICIS.

	30-Mar	Change	%
Dow Jones Industrial Average	22,327.48	690.70	3.19
S&P 500	2,626.65	85.18	3.35
Dow Jones US Chemicals Index	469.63	15.34	3.38
S&P 500 Chemicals Industry Index	476.20	16.75	3.65

Stock markets have been exceptionally volatile for more than a month. Starting on 24 February, the Dow Jones Industrial Average has swung by at least 2% in 21 of the past 26 trading sessions.

The coronavirus (Covid-19) has caused much of this volatility as it continues to spread in the US and the rest of the world.

The following shows the cases in the US.

US	27-Mar	30-Mar
Cases	85,356	140,904
Death	1,246	2,405
States	50	50

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

The following shows the cases in the world.

World	27-Mar	30-Mar
Cases	509,164	693,224
Death	23,335	33,106
Nations	201	202

Source: World Health Organization (WHO)

The coronavirus is one of the reasons behind the decline in oil prices. The travel restrictions imposed to limit the spread of the disease has caused a decline in fuel demand.

US refiner PBF Energy is running its units a minimum rates because of the decline in demand.

Another factor dragging down oil prices is the end of a production-cut agreement between OPEC and Russia. Starting on 1 April, they will have no constraints on oil production.

At such low prices, companies cannot replace oil, said Dow CEO Jim Fitterling. A price of $55-60/bbl is more sustainable.

The combination of rising supply and falling demand has led to concerns that the world would run out of storage, forcing high-cost wells to shut-in.

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 petrochemicals and polymers.

In North America, ethylene spot prices remain at 34-year lows, according to the ICIS margins analysis. March contracts for propylene settled at an 11-year low.

In Europe, chemical stocks and bourses rose despite the drop in oil prices.

In Asia, shares in petrochemical companies fell sharply.

China’s politburo – its top policymaking body – in a meeting on 27 March said that it is ready to push out a slew of measures to counter shocks from the coronavirus pandemic.

The following shows the US-listed companies followed by ICIS.

	$ Current Price	$ Change	% Change
AdvanSix	8.33	-0.62	-6.88
Axalta Coating Systems	17.77	0.08	0.45
Braskem	6.76	-0.30	-4.25
Celanese	73.62	2.35	3.30
Dow	28.62	0.06	0.21
DuPont	33.33	-0.50	-1.48
Eastman	47.56	1.09	2.35
HB Fuller	27.67	0.88	3.28
Huntsman	14.03	-0.21	-1.47
Ingevity	33.82	0.35	1.05
Kraton	8.56	1.90	28.53
Kronos Worldwide	8.59	0.36	4.31
LyondellBasell	49.54	0.14	0.28
Methanex	12.19	-0.03	-0.25
NewMarket	398.16	29.82	8.10
Olin	11.70	0.22	1.92
PolyOne	18.62	1.06	6.04
PPG	85.23	0.23	0.27
RPM International	60.84	0.87	1.45
Sherwin-Williams	479.79	20.13	4.38
Stepan	86.28	7.73	9.84
Chemours	9.64	0.13	1.31
Trinseo	18.70	-0.38	-1.97
Tronox	5.62	0.29	5.36
Univar	10.98	0.48	4.57
Venator Materials	1.72	-0.08	-4.44
Westlake Chemical	37.98	-0.88	-2.26

Additional reporting by Alex Snodgrass, Joseph Chang, Jonathan Lopez and Nurluqman Suratman

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