US chem shares plunge after retailers warn of costs

HOUSTON (ICIS)–US-listed shares of chemical companies fell on Wednesday as the general stock market posted steep declines after retailers complained about rising costs.

The table shows the major indices followed by ICIS.

	18-May	Change	%
Dow Jones Industrial Average	31,490.07	-1,164.52	-3.57%
S&P 500	3,923.77	-165.08	-4.04%
Dow Jones US Chemicals Index	837.06	-24.01	-2.79%
S&P 500 Chemicals Industry Index	838.59	-23.77	-2.76%

Stocks fell after major US retailer Target reported its Q1 earnings.

Its operating margin rate was 5.3%, well below expectations because of the company’s efforts to reduce excess inventory as well as higher costs for freight and transportation, the company said.

For the second quarter, the operating margin should remain low, varying  widely from 5.3%, the company said. For all of 2022, the operating income margin rate should be 6%.

For comparison, Target expects its long-term margin to be at least 8%.

Shares of Target fell by nearly 25%.

On Tuesday, US retailer Walmart said in its Q1 earnings report that inflation in the US, especially for food and fuel, put more pressure on the company’s margin mix and operating costs than it expected.

For the first quarter, operating expenses as a percentage of net sales rose by 45 basis points, mainly because of higher wages in Walmart’s US operations.

Walmart lowered its earnings guidance for the second quarter and for the full year.

Walmart shares have fallen by more than 17% in the past five days.

Rising costs and excess inventory could slow down demand for goods – although most chemical companies had not noted any demand destruction when they discussed their first-quarter earnings.

Attempts to lower inflation by the Federal Reserve could slow down the economy as well.

It raised its benchmark interest rate by half a point at its last meeting in May, and similar hikes are expected for the rest of the year.

The following table shows the US-listed shares of chemical companies followed by ICIS.

Name	$ Current Price	$ Change	% Change
AdvanSix	45.97	-1.24	-2.62
Avient	47.09	-1.15	-2.37
Axalta Coating Systems	25.47	-1.00	-3.78
Braskem	17.09	-0.83	-4.63
Celanese	150.85	-4.66	-3.00
Dow	68.74	-1.23	-1.76
DuPont	64.29	-2.12	-3.19
Eastman	103.84	-3.07	-2.87
HB Fuller	66.91	-0.12	-0.19
Huntsman	35.57	-0.95	-2.60
Ingevity	67.48	-0.23	-0.34
Kronos Worldwide	16.43	0.00	0.00
LyondellBasell	110.20	-1.20	-1.08
Methanex	49.78	-1.28	-2.50
NewMarket	336.04	-3.79	-1.12
Olin	62.89	-2.34	-3.59
PPG	119.40	-4.93	-3.97
RPM International	84.22	-2.66	-3.06
Sherwin-Williams	258.51	-10.75	-3.99
Stepan	107.67	-0.63	-0.58
Chemours	41.39	-1.43	-3.34
Trinseo	45.44	-0.64	-1.39
Tronox	17.66	-0.70	-3.81
Univar Solutions	28.38	-0.66	-2.26
Venator Materials	1.76	-0.11	-5.88
Westlake	130.95	-5.34	-3.92

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