US chem shares soar as Dow Jones rises 7.73%

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.