Europe chemicals shares buoyant on positive indicators

Morgan Condon

29-Apr-2020

LONDON (ICIS)–European chemicals stocks maintained buoyant levels ahead of the market close on Wednesday on the back of some encouraging indicators despite the continued economic woes caused by the coronavirus.

Companies listed on the Stoxx 600 chemicals index largely recorded a boost in share prices, with the market itself 1.25% up overall.

This uptick reflected positive sentiment in the wider economic markets, with the FTSE marking a seven-week high up 2.52%, France’s CAC increasing 2.26%, and both surpassed by the German DAX market gains of 2.96% from the previous day.

Rallying was recorded in the Asian market, as crude stocks in the US were lower than previously anticipated, providing price support to West Texas Intermediate (WTI) and Brent levels. The outcome of the US Federal Reserve’s latest meeting is also expected later today.

Despite significant downturns that have rocked the petrochemical industry, this has not been reflected in the pricing for all products with butanediol (BDO) second quarter contracts noting a relatively modest decrease due to limited downstream demand.

The prospect of a treatment for the virus developed by Gilead Sciences has also bolstered confidence in the markets, as the development of a cure or vaccine will pave a faster route toward economic recovery.

Companies reported first quarter results today with mixed outlooks. Covestro recorded a 12% drop in sales on the previous year and anticipates core volume growth for the year to be below 2019 levels.

While Austrian energy and petrochemicals major OMV marked a similar fall in sales on the previous year, but anticipates stable petrochemical margins on last year.

There are still pessimistic indicators, as financial services firm Fitch downgraded Italy’s economic rating to BBB due to the devastating impact the virus has had on the country’s fiscal position.

“Fitch forecasts an 8% GDP contraction in 2020 and the risks to this baseline forecast are tilted to the downside, as it assumes that the coronavirus can be contained in H2 2020, leading to a relatively strong economic recovery in 2021,” the credit note read.

“In the event of a second wave of infections and the widespread resumption of lockdown measures, economic outturns would be weaker for 2020 and 2021.”

Focus article by Morgan Condon

Front page image: BASF’s cracker at Ludwigshafen. Source: BASF

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

READ MORE

Global News + ICIS Chemical Business (ICB)

See the full picture, with unlimited access to ICIS chemicals news across all markets and regions, plus ICB, the industry-leading magazine for the chemicals industry.

Contact us

Now, more than ever, dynamic insights are key to navigating complex, volatile commodity markets. Access to expert insights on the latest industry developments and tracking market changes are vital in making sustainable business decisions.

Want to learn about how we can work together to bring you actionable insight and support your business decisions?

Need Help?

Need Help?