US chemical shares, stock market rise with oil prices

HOUSTON (ICIS)–US-listed shares of chemical companies and the general stock market rose on Wednesday in tandem with oil prices, the third day in a row that the group moved in lockstep.

Brent futures for June delivery closed at $20.37, up by 5.4% from Tuesday’s close of $19.33/bbl. Despite the increase, prices remain at 20-year lows.

West Texas Intermediate (WTI) for June delivery closed at $13.78, up 19.1% from Tuesday’s close of $11.57.

Oil prices rose after US crude stocks rose less than expected.

There are growing concerns that oil supplies are rising faster than demand, which has been decimated by the effects of the coronavirus. As a result, signs that oil supplies are growing slower than expected could boost crude markets.

The table below shows the major indices followed by ICIS.

	22-Apr	Change	%
Dow Jones Industrial Average	23,475.82	456.94	1.99
S&P 500	2,799.31	62.75	2.29
Dow Jones US Chemicals Index	497.55	10.87	2.23
S&P 500 Chemicals Industry Index	503.55	11.71	2.38

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

	$ Current Price	$ Change	% Change
AdvanSix	9.19	0.37	4.20
Axalta Coating Systems	18.05	1.00	5.87
Braskem	7.71	-0.06	-0.77
Celanese	75.69	2.23	3.04
Dow	31.86	0.98	3.17
DuPont	39.90	0.83	2.12
Eastman	54.11	1.39	2.64
HB Fuller	31.66	1.15	3.77
Huntsman	15.24	0.30	2.01
Ingevity	38.17	0.47	1.25
Kraton	8.95	0.18	2.05
Kronos Worldwide	8.94	0.13	1.48
LyondellBasell	48.27	1.64	3.52
Methanex	13.32	0.66	5.21
NewMarket	399.12	4.72	1.20
Olin	13.34	0.01	0.04
PolyOne	19.90	-0.05	-0.23
PPG	90.38	2.37	2.69
RPM International	64.11	1.29	2.05
Sherwin-Williams	500.31	15.41	3.18
Stepan	89.49	-0.50	-0.56
Chemours	10.24	0.06	0.59
Trinseo	19.11	0.86	4.71
Tronox	6.11	0.00	0.00
Univar	11.64	0.29	2.51
Venator Materials	1.15	-0.05	-4.17
Westlake Chemical	38.69	0.66	1.74

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.

Several chemicals are made in refineries. As refiners lower production rates in response to lower fuel demand, output of these chemicals falls.

For one of these chemicals, mixed xylenes (MX), prices have risen by nearly 30% since the end of March.

Prices recently jumped again because of exports and cuts in refinery rates.

Those rates now stand at 67.6%. At the start of the year, they exceeded 90%.

In Europe, chemical shares rose slightly.

Within petrochemicals, naphtha and benzene are taking a hit from crude’s volatile, historic week, while styrene traded flat by the European afternoon. Values remain at record lows.

Prices for polyvinyl chloride (PVC), a key chemical in the construction industry, continued sliding this week in what would be in a normal year the run-up to the sector’s peak season.

Base oils prices fell across the board, both for European domestic values as well as export prices for Europe, the Baltics and the Black Sea regions due to crude oil’s volatility and the reigning pessimism.

Several trade groups and CEOs within the European petrochemicals industry, as well as other manufacturing sectors, signed a letter to EU leaders asking them to avoid protectionist moves as the region’s rebuilds its economy after the pandemic.

In Asia, shares in petrochemical companies fell.

Focus article by Al Greenwood

Additional reporting by Andrew Putwain, Adam Burkin, Jonathan Lopez and Nurluqman Suratman

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