LONDON (ICIS)--European chemicals stocks have kicked off the week on a troubled footing in response to the continued pessimistic economic backdrop on Monday.
Share prices for companies listed on the Stoxx 600 chemicals market fell unanimously, with the index posting a 2.39% drop on the previous day’s levels.
There was some resistance for other products, with contract prices for cyclohexane (CX) increasing in line with feedstock benzene, and glycol ethers sellers targeting rollovers to cushion margins as feedstock costs decline.
Overall, near-term expectations for the petrochemicals industry in Europe remain bleak as demand in downstream markets remains limited.
Sentiment in the chemicals industry was echoed throughout the wider European bourses, with France’s CAC 40 stock marking the most significant fall at 4.24%, followed by Germany’s DAX, down 3.64%, and the UK's FTSE 100, down 2.34%.
Tensions remain in Europe ahead of Germany’s constitutional ruling about whether it will limit the extent of the European Central Bank (ECB)’s pledge to buy €750bn in bonds issued by states in the 19-country currency union.
The latest economic data demonstrates further declines in April, with the composite Purchasing Managers’ Index (PMI) in the eurozone falling to 33.4 points due to lockdown measures, with Spain and Italy particularly affected.
A reading below 50.0 points shows economic contraction.
Germany’s automotive industry also continues to be hammered by the current climate, with the economic analysis from the ifo Institute recording historic weakness in its ifo Business Climate survey.
Further afield the relationship between the US and China has once more hit a rocky patch as discussions of tariffs have been re-introduced by US President Donald Trump, alongside accusatory rhetoric concerning the coronavirus.
Asian petrochemical shares fell in response to the escalating trade tensions between China and the US, and Saudi petrochemicals major SABIC said on Monday it had posted a net loss in the first quarter, year on year, with sales and earnings also falling sharply.
Focus article by Morgan Condon
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