US chem shares fall even as oil rises for second day

HOUSTON (ICIS)–US-listed shares of chemical companies fell on Friday even as oil prices rose for the second day on the prospect that the world’s major oil producers could reach an agreement to limit output.

OPEC and its allies are working on a deal to cut oil production by about 10% of global output, Reuters reported, citing a source with the cartel.

A meeting is scheduled for 6 April between OPEC, Russia and the other allies of the cartel, Reuters said.

The figure quoted by Reuters is similar to one said by US President Donald Trump said, although he indicated that Saudi Arabia and Russia would be responsible for the cuts.

It is unclear how OPEC and its allies could achieve a cut as large as 10% without help from other countries that normally do not meddle in production, such as the US.

Nonetheless, the prospects of a production deal buoyed oil markets. Brent futures contracts for June delivery settled at $34.11/bbl on Friday, up from its Wednesday settlement of $24.74/bbl.

Despite the two-day rally, oil prices are still down sharply from the start of the year, when they were above $60/bbl.

US producers have responded by idling oil rigs at rates last seen in 2015 during the last crash in crude prices.

Oil prices are important to the chemical industry because prices for chemicals and plastics tend to follow them with a six-month lag, according to the ICIS Petrochemical Index (IPEX). The index tracks 12 major petrochemicals and polymers.

Last month, the global IPEX fell to its lowest level last month since April 2009.

STOCK MARKETS
The major stock indices followed by ICIS fell, as shown in the table below.

	3-Apr	Change	%
Dow Jones Industrial Average	21,052.53	-360.91	-1.69
S&P 500	2,488.65	-38.25	-1.51
Dow Jones US Chemicals Index	433.97	-7.51	-1.70
S&P 500 Chemicals Industry Index	437.41	-8.21	-1.84

The declines followed news that the unemployment rate in the US rose to 4.4% from 3.5%.

The US has imposed several travel and work restrictions to slow down the spread of the coronavirus (Covid-19). The result has battered the nation’s economy.

Meanwhile, the disease continues to spread, as shown in the following tables.

US	2-Apr	3-Apr
Cases	213,144	239,279
Deaths	4,513	5,443
States	50	50

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

World	2-Apr	3-Apr
Cases	900,306	976,249
Deaths	45,693	50,489
Nations	205	206

Source: World Health Organization (WHO)

In Europe, chemical stocks were largely flat. Prices for naphtha and benzene rose following the news of a possible oil deal.

The purchasing managers’ index (PMI) for the eurozone service sector in March showed a collapse in output to 26.4 from 52.6 in February

In Asia, petrochemical shares ended the week mixed.

The table below shows Friday’s performance of the US-listed shares followed by ICIS.

	$ Current Price	$ Change	% Change
AdvanSix	9.76	-1.78	-15.42
Axalta Coating Systems	15.51	-0.87	-5.31
Braskem	5.88	-0.57	-8.84
Celanese	67.1	-1.5	-2.19
Dow	27.97	-0.06	-0.21
DuPont	31.87	-0.64	-1.97
Eastman	45.09	-0.29	-0.64
HB Fuller	25.69	-0.97	-3.64
Huntsman	12.93	-0.35	-2.64
Ingevity	34.66	-1.7	-4.68
Kraton	7.92	-0.82	-9.38
Kronos Worldwide	7.82	-0.38	-4.63
LyondellBasell	46.1	0.18	0.39
Methanex	13.2	0.65	5.18
NewMarket	389.24	-7.76	-1.95
Olin	11.61	0.17	1.49
PolyOne	17.57	-0.51	-2.82
PPG	80.43	-0.3	-0.37
RPM International	56.94	-0.93	-1.61
Sherwin-Williams	420.03	-16.88	-3.86
Stepan	90.06	2.48	2.83
Chemours	7.26	-0.25	-3.33
Trinseo	17.67	0.24	1.38
Tronox	4.28	0.15	3.63
Univar	9.59	-0.3	-3.03
Venator Materials	1.39	0.1	7.75
Westlake Chemical	35.12	-0.08	-0.23

Focus article by Al Greenwood

Additional reporting by Stefan Baumgarten, Amanda Hay, Tom Brown and Nurluqman Suratman

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