US chemical stocks fall on crude oil weakness despite new cut from Saudi Arabia
NEW YORK (ICIS)–US-listed chemical stocks mostly declined further than the broader market, which was largely flat, on crude oil weakness.
Brent crude oil prices declined $1.37/bbl, or 4.4%, to $29.60/bbl while WTI prices fell $0.60, or 2.4%, to $24.14/bbl. This came despite Saudi Arabia’s announcement it would cut oil production by another 1m bbl/day starting on 1 June.
Crude oil prices heavily influence chemical prices. Oil price declines also generally make US petrochemical producers less competitive globally as they predominantly use natural gas liquids (NGL) feedstock while counterparts in Europe and Asia use oil-based naphtha.
The general trend of coronavirus cases in the US has been on the decline, but there are concerns about a rebound once states ease on lockdown measures.
In Europe, Spain, Italy and Switzerland started to ease lockdown restrictions. In Asia, a new cluster of cases from a nightclub district in Seoul, South Korea, is sparking concerns.
The following shows the performance of the major indexes:
|Dow Jones Industrial Average||24,221.99||-109.33||-0.45%|
|Dow Jones US Chemicals Index||535.08||-7.11||-1.31%|
|S&P 500 Chemicals Industry Index||540.82||-5.99||-1.10%|
The following shows the US-listed chemical stocks followed by ICIS:
|$ Price||$ Change||% Change|
|Axalta Coating Systems||19.62||0.01||0.05|
US sales of new light vehicles in April fell by nearly 25% month on month and was down by nearly 48% year on year, according to seasonally adjusted annual rates (SAAR) from the US Bureau of Economic Analysis (BEA) reported on Monday.
Dow announced a price increase of 4 cents/lb ($88/tonne) on all polyethylene (PE) resins sold in the US as of 1 June or as contracts allow, according to a customer letter.
Canada’s NOVA Chemicals and Enerkem will collaborate to explore turning non-recyclable and non-compostable municipal waste into ethylene, the companies announced.
Dow is poised to outperform LyondellBasell in terms of share price, a chemical equity analyst said.
US spot toluene-RBOB spread narrows to its lowest level in 11 years, market analysis showed.
Dutch group OCI said it expects to deliver “robust volume growth in 2020” for methanol after turnarounds are complete in the US and the Netherlands.
The risk of US crude storage filling dissipates after heading toward capacity.
In Europe, UK Prime Minister Boris Johnson said over the weekend that several industries would be allowed to return to activity this week.
However, in Germany, concerns of a coronavirus resurgence came to the forefront as the Robert Koch Institute measuring the R rate said it had risen to 1.1 indicating a growing rate of new infections. Restrictions are now back on the table.
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