US chem shares soar as Dow Jones rises 7.73%

Author: Al Greenwood

2020/04/06

HOUSTON (ICIS)--Shares of US-listed chemical companies continued to rise sharply on Monday as the Dow Jones Industrial Average rose by 7.73%.

The table below shows the performance of the major indices followed by ICIS.

6-Apr Change %
Dow Jones Industrial Average 22,679.99 1,627.46 7.73
S&P 500 2,663.68 175.03 7.03
Dow Jones US Chemicals Index 467.67 33.70 7.77
S&P 500 Chemicals Industry Index 472.81 35.40 8.09

US chemical shares started to rally last week when oil prices began rising on the prospects of a possible deal between OPEC and Russia.

The two sides have been producing oil without constraint since their production-cut agreement ended on 1 April.

The two sides plan to meet on Thursday, according to reports.

Brent has rallied after reaching a low of $24.74/bbl last week.

Brent closed at $33.05/bbl on Monday, down by $1.06/bbl from Friday.

The higher crude oil prices have significantly narrowed the European cost advantage in high density polyethylene (HDPE) over the US. European and Asia producers predominantly use oil-based naphtha feedstock while US producers primarily use ethane, based on natural gas.

As of 3 April, on a spot basis, US integrated HDPE margins narrowed to $528/tonne from $574/tonne a week earlier, according to ICIS Petrochemical Analytics. But European HDPE margins fell further - to $777/tonne from $1,069 in the prior week, narrowing the gap with the US. Asia HDPE margins also fell - to $420/tonne versus $565 a week ago. The margin data takes into account co-products (propylene, butadiene) from ethylene production.

Higher crude oil prices would restore the US petrochemical feedstock advantage, but crude faces huge headwinds from a collapse in demand from transportation fuels, caused by restrictions imposed to control the spread of the coronavirus (Covid-19).

The following tables show the spread of the disease.

US 3-Apr 6-Apr
Cases 239,279 330,891
Death 5,443 8,910
States 50 50

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

World 3-Apr 6-Apr
Cases 976,249 1,214,973
Death 50,489 67,841

Source: World Health Organization (WHO)

For the chemical industry, several contract workers at Formosa Plastics USA's plant in Point Comfort, Texas, have tested positive for the coronavirus, the company said.

In Europe, stocks rose, even as the International Monetary Fund (IMF) said that the coronavirus has pushed the world into a recession. This year could be worse than the global financial crisis of 2008-2009.

In Asia, shares in chemical companies rose.

The Japanese government may declare a state of emergency this week to stem the spread of the coronavirus, according to media reports.

The Singapore government announced late last week a month-long coronavirus "circuit breaker" starting 7 April.

The table below shows the US-listed companies followed by ICIS.

$ Current
Price
$ Change % Change
AdvanSix 11.25 1.49 15.27
Axalta Coating Systems 16.63 1.12 7.22
Braskem 6.29 0.41 6.97
Celanese 72.56 5.46 8.14
Dow 30.47 2.5 8.94
DuPont 35.32 3.45 10.83
Eastman 50.19 5.1 11.31
HB Fuller 27.61 1.92 7.47
Huntsman 14.57 1.64 12.65
Ingevity 38.37 3.71 10.7
Kraton 9.03 1.11 14.02
Kronos Worldwide 8.22 0.4 5.12
LyondellBasell 49.89 3.79 8.22
Methanex 13.24 0.02 0.15
NewMarket 379.9 -9.34 -2.4
Olin 12.5 0.89 7.62
PolyOne 19.29 1.72 9.79
PPG 86.52 6.09 7.57
RPM International 59.86 2.92 5.13
Sherwin-Williams 457.24 37.21 8.86
Stepan 93.19 3.13 3.48
Chemours 8.35 1.09 15.01
Trinseo 20.19 2.52 14.26
Tronox 4.84 0.56 13.08
Univar 10.82 1.23 12.83
Venator Materials 1.48 0.09 6.47
Westlake Chemical 38.98 3.86 10.99

Additional reporting by Joseph Chang, Bill Bowen, Morgan Condon and Nurluqman Suratman

Thumbnail image by Shutterstock

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