US chem shares fall amid stock market fears of inflation

Al Greenwood

18-May-2022

HOUSTON (ICIS)–US-listed shares of chemical companies were trading down sharply midday on Wednesday as the general stock market posted even steeper declines as retailers complained about rising costs.

The table shows the major indices followed by ICIS.

18-May Change %
Dow Jones Industrial Average 31,591.66 -1,062.93 -3.26%
S&P 500 3,938.06 -150.79 -3.69%
Dow Jones US Chemicals Index 840.87 -20.2 -2.35%
S&P 500 Chemicals Industry Index 842.11 -20.25 -2.35%

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.

“Throughout the quarter, we faced unexpectedly high costs, driven by a number of factors, resulting in profitability that came in well below our expectations and well below where we expect to operate over time,” said CEO Brian Cornell.

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%.

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 46.16 -1.05 -2.21
Avient 47.55 -0.68 -1.41
Axalta Coating Systems 25.56 -0.91 -3.44
Braskem 17.05 -0.88 -4.88
Celanese 151.98 -3.54 -2.27
Dow 68.91 -1.06 -1.51
DuPont 64.61 -1.8 -2.71
Eastman 104.57 -2.33 -2.18
HB Fuller 66.96 -0.07 -0.1
Huntsman 35.76 -0.76 -2.08
Ingevity 68.26 0.55 0.81
Kronos Worldwide 16.33 -0.10 -0.61
LyondellBasell 111.18 -0.22 -0.2
Methanex 50.07 -0.98 -1.92
NewMarket 338.07 -1.77 -0.52
Olin 63.25 -1.98 -3.04
PPG 119.84 -4.49 -3.61
RPM International 84.63 -2.25 -2.59
Sherwin-Williams 259.57 -9.69 -3.6
Stepan 108.48 0.18 0.17
Chemours 41.63 -1.19 -2.78
Trinseo 46.28 0.2 0.43
Tronox 17.67 -0.69 -3.76
Univar Solutions 28.56 -0.47 -1.62
Venator Materials 1.76 -0.11 -5.88
Westlake 131.72 -4.58 -3.36

Thumbnail shows a stock-market chart. Image by Shutterstock. 

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