US chem shares rise even as Dow Jones gives up massive rally

Al Greenwood

07-Apr-2020

HOUSTON (ICIS)–Most of the US-listed stocks followed by ICIS rose on Tuesday even as the major indices gave up a massive rally.

Early in the day, the Dow Jones Industrial Average was up by more than 900 points. It lost all of those gains and then some, closing at a loss as shown below.

7-Apr Change %
Dow Jones Industrial Average 22,653.86 -26.13 -0.12
S&P 500 2,659.41 -4.27 -0.16
Dow Jones US Chemicals Index 482.36 14.69 3.14
S&P 500 Chemicals Industry Index 487.12 14.31 3.03

The declines come amid continued worries about the effects the coronavirus (Covid-19) could have on GDP.

Globally, cases reached 1.28m, up 5.6%, according to the World Health Organization (WHO). Fatalities rose by 7.3%.

In the US, cases reached 374,329 on Tuesday, up by 13% from Monday, according to the US Centers for Disease Control and Prevention (CDC). Fatalities rose by 35%.

Huntsman CEO Peter Huntsman said that the US economy could take a year before it recovers to pre-coronavirus levels.

“We’ll probably see 50-75% of what was lost in March, in terms of demand, recover in the next quarter or so, depending on how we manage this crisis and how we get the economy moving again,” Huntsman said in an interview with ICIS.

“You’ll see a two-step recovery here. One will be a quick phase of recovery as people go back to work and restaurants start opening. You’ll see auto companies gearing back up, people restock inventories, and we’ll all feel pretty good about things,” he said.

Because of the coronavirus, US carbon-fibre producer Hexcel and control-systems company Woodward agreed to terminate their deal to combine in an all-stock merger of equals.

The damage that the disease is causing to oil demand could lead to a new production-cut agreement among the major producers. OPEC and its allies plan to meet on Thursday to discuss oil markets.

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.

Prices for Brent futures still remain off their lows although they fell by $1.18/bbl on Tuesday to close at $31.87/bbl.

In Europe, stock prices for chemical companies rose. Spot prices for chemicals continued gaining ground in Tuesday’s afternoon trading.

Eurozone finance ministers are due to start a meeting aiming to agree on economic packages targeted at softening the economic shock from the pandemic. While infection rates are slowing down, most countries have yet to announce their exit strategy from the quarantines and industrial shutdowns that have wrecked the economy.

In Asia, petrochemical stocks rose amid signs that coronavirus fatality rates in some of the world’s worst-hit regions are slowing down.

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

$ Current
Price
$ Change % Change
AdvanSix 11.38 0.14 1.25
Axalta Coating Systems 16.7 0.06 0.36
Braskem 6.46 0.23 3.69
Celanese 75.84 3.37 4.65
Dow 32.33 1.79 5.86
DuPont 37.26 1.87 5.28
Eastman 52.87 2.69 5.36
HB Fuller 28.24 0.62 2.24
Huntsman 15.05 0.46 3.15
Ingevity 38.11 -0.36 -0.94
Kraton 9.07 0.03 0.33
Kronos Worldwide 8.32 0.1 1.22
LyondellBasell 51.65 1.77 3.55
Methanex 13.38 0.14 1.06
NewMarket 384.31 3.46 0.91
Olin 12.79 0.29 2.32
PolyOne 19.37 0.08 0.41
PPG 91.09 4.46 5.15
RPM International 62.45 2.67 4.47
Sherwin-Williams 463.35 4.73 1.03
Stepan 93.48 -0.01 -0.01
Chemours 8.63 0.28 3.35
Trinseo 20.83 0.58 2.86
Tronox 4.77 -0.07 -1.45
Univar 11.29 0.46 4.25
Venator Materials 1.31 -0.17 -11.49
Westlake Chemical 40.58 1.54 3.94

Focus article by Al Greenwood

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

Additional reporting by Joseph Chang and Stefan Baumgarten, Morgan Condon and Nurluqman Suratman

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