US chem stocks soar following news of coronavirus drug

Author: Al Greenwood

2020/04/17

HOUSTON (ICIS)--US-listed chemical stocks rose sharply on Friday following a report that a hospital is seeing positive results from an experimental drug for the coronavirus (Covid-19).

The publication STAT reported the early test results of Gilead Sciences’s drug Remdesivir.

Meanwhile, statements from US President Donald Trump raised the prospects of parts of the US ending their lockdowns. The lockdowns have limited the spread of the coronavirus at the expense of the economy.

The gains among chemical shares exceeded those of the stock market, as shown in the following table.

17-Apr Change %
Dow Jones Industrial Average 24,242.49 704.81 2.99
S&P 500 2,874.56 75.01 2.68
Dow Jones US Chemicals Index 511.39 20.37 4.15
S&P 500 Chemicals Industry Index 518.13 21.52 4.33

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

$ Current
Price
$ Change % Change
AdvanSix 10.50 0.63 6.38
Axalta Coating Systems 18.31 1.68 10.10
Braskem 8.07 -0.21 -2.54
Celanese 78.50 6.24 8.64
Dow 33.45 1.82 5.77
DuPont 38.40 2.18 6.01
Eastman 55.36 3.13 5.99
HB Fuller 32.10 2.58 8.72
Huntsman 15.61 0.73 4.87
Ingevity 39.70 1.79 4.73
Kraton 9.97 1.42 16.61
Kronos Worldwide 9.13 0.89 10.80
LyondellBasell 52.37 2.92 5.91
Methanex 13.21 0.85 6.88
NewMarket 403.84 10.33 2.63
Olin 13.80 0.78 5.99
PolyOne 20.73 1.42 7.35
PPG 93.43 4.53 5.10
RPM International 66.01 1.40 2.17
Sherwin-Williams 516.08 31.05 6.40
Stepan 94.14 2.98 3.27
Chemours 10.63 1.32 14.12
Trinseo 19.31 0.89 4.83
Tronox 6.40 1.44 29.03
Univar 11.95 0.92 8.34
Venator Materials 1.36 0.16 12.92
Westlake Chemical 40.87 2.92 7.68

Tronox's shares rose the most following an announcement that adjusted first-quarter earnings should rise by 22%.

Friday's rally broke a string of declines among chemical shares that followed the drop in oil prices.

Oil futures have fallen during much of the week as concerns grew that a recent agreement to cut production will be too small to offset the fall in demand caused by the coronavirus.

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.

For US chemical producers, lower oil prices can shrink their margins because they rely overwhelmingly on ethane and other natural gas liquids (NGLs) as feedstock. Much of the world relies on oil-based naphtha.

US producers lose their cost advantage when naphtha prices fall in relation to ethane.

Oil prices broke their losing streak on Friday, with Brent futures closing at $28.08/bbl, up from $27.82/bbl.

Despite the increase, oil prices remain well below levels at the start of the year, causing US companies to lower activity.

Over the last five weeks, the number of working oil rigs has declined by 245, according to Baker Hughes.

In Europe, stock markets rose on the prospects of lockdowns ending.

Spot prices for key polymer polyethylene (PE) fell to an 11-year low.

April contract prices for phthalic anhydride (PA) were confirmed on Friday at a 16-year low after contracts for its feedstock orthoxylene (OX) were agreed around 40% lower compared with March.

In Asia, China published official figures for GDP growth in the first quarter, when the coronavirus outbreak brought the economy to a standstill; the fall of 6.8% quarter on quarter was the first since the country started quarterly records in 1992.

Focus article by Al Greenwood

Additional reporting by Jonathan Lopez

Thumbnail image by Shutterstock

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