US tariffs against China sends chem stocks, Dow Jones plummeting

22 March 2018 21:20 Source:ICIS News

HOUSTON (ICIS)--Chemical stocks fell sharply on Thursday after US President Donald Trump said the nation may pursue tariffs on at least $50bn of Chinese goods.

The Dow Jones Industrial Average closed at 23,957.89, down 724.42 points or 2.93% as of 15:12 hours Houston time (21:12 hours GMT).

The S&P 500 closed at 2643.69, down 68.24 points or 2.52%.

Every US-listed company followed by ICIS fell.

The Dow Jones US Chemicals Index closed at 633.66, down 18.05 points or 2.77%.

Platform Specialty Products was the biggest loser, falling by 5.69%. The company makes agrochemicals and electronic chemicals.

Trinseo, a major US and European producer of styrene and derivatives, some of which are exported to China, plunged 5.15%.

The following table shows the companies followed by ICIS that fell by the most.

Name $ Current
Price
$ Change % Change
Platform Specialty Products Corp 9.78 -0.59 -5.69
Ecopetrol SA ADR 18.34 -1.04 -5.34
Trinseo SA 75.5 -4.1 -5.15
Tronox Ltd 18.99 -0.92 -4.62
Huntsman Corp 29.58 -1.4 -4.52
Kronos Worldwide Inc 22.74 -1.05 -4.41
LyondellBasell Industries NV 106.59 -4.62 -4.15
AdvanSix Inc 35.23 -1.52 -4.14
Ingevity Corp 75.11 -3.18 -4.06
Praxair Inc 146.07 -5.76 -3.79

Source: Morningstar

US-based compounder A Schulman fell by the least. It is being acquired by LyondellBasell.

Refiner Marathon Petroleum was the second best performer, falling by just 0.4%.

The Chinese import tariffs announced by Trump followed aluminium and steel tariffs announced earlier in the year.

The tariffs will increase plant construction costs for petrochemical companies and refineries. However, the industries' larger concern is that China and other countries could impose retaliatory tariffs on US exports, damaging US and global economies.

There is also the concern about an escalating trade war, as the US is a major exporter of chemicals. Chemical exports are expected to increase significantly as companies start up new petrochemical plants in the US based on cheap shale gas feedstocks.

The output from these plants will overwhelm domestic demand, so companies will rely on export markets to absorb the new capacity. In particular, companies said they would target markets in Asia-Pacific.

Petrochemicals could be a prime target for retaliatory tariffs because of the size of US exports and extent of the cost advantage the country has in making the products.

However, one chemical equity analyst believes this is unlikely and that the plunge in US chemical stock prices was an overreaction.

"I think it was an overreaction today. If you think trade, you think China, and China continues to be a net importer of chemicals. Chemicals in my view would be low in the order of products to be considered for tariffs," said Hassan Ahmed, analyst at Alembic Global Advisors.

Countries could retaliate by targeting US export crops such as soybeans and corn. Tariffs would discourage plantings, which would lower demand for agrochemicals and  – in the case of corn – lower demand for nitrogen fertilizers.

The table below shows all of the US-listed companies followed by ICIS.

Name $ Current
Price
$ Change % Change
Platform Specialty Products Corp 9.78 -0.59 -5.69
Ecopetrol SA ADR 18.34 -1.04 -5.34
Trinseo SA 75.5 -4.1 -5.15
Tronox Ltd 18.99 -0.92 -4.62
Huntsman Corp 29.58 -1.4 -4.52
Kronos Worldwide Inc 22.74 -1.05 -4.41
LyondellBasell Industries NV 106.59 -4.62 -4.15
AdvanSix Inc 35.23 -1.52 -4.14
Ingevity Corp 75.11 -3.18 -4.06
Praxair Inc 146.07 -5.76 -3.79
Celanese Corp 100.4 -3.9 -3.73
Westlake Chemical Corp 113.32 -4.36 -3.71
CF Industries Holdings Inc 37.25 -1.42 -3.67
Albemarle Corp 94.07 -3.41 -3.5
Cabot Corp 57.02 -1.92 -3.26
W R Grace & Co 61.56 -2.06 -3.23
Eastman Chemical Co 103.99 -3.46 -3.22
NewMarket Corp 395.6 -12.9 -3.16
Methanex Corp 58.7 -1.9 -3.14
Calumet Specialty Products Partners LP 7.03 -0.23 -3.1
Sherwin-Williams Co 393 -12.21 -3.01
H.B. Fuller Co 49.02 -1.47 -2.91
Braskem SA ADR repr Class A 28.42 -0.84 -2.87
DowDuPont Inc 65.6 -1.83 -2.71
Ashland Global Holdings Inc 68.21 -1.89 -2.7
RPM International Inc 47.89 -1.32 -2.68
Nutrien Ltd 47.33 -1.26 -2.59
The Chemours Co 48.66 -1.27 -2.54
Valero Energy Corp 93.04 -2.42 -2.53
The Mosaic Co 24.68 -0.6 -2.37
Alerian MLP ETF 9.39 -0.23 -2.34
Enterprise Products Partners LP 24.58 -0.59 -2.34
PPG Industries Inc 111.29 -2.66 -2.33
Ultrapar Participacoes SA ADR 21.1 -0.48 -2.22
PolyOne Corp 42.49 -0.94 -2.16
Petroleo Brasileiro SA Petrobras ADR 14.19 -0.31 -2.1
Cosan Ltd 10.98 -0.23 -2.05
Exxon Mobil Corp 73.49 -1.54 -2.05
Kraton Corp 48.02 -1 -2.04
Valvoline Inc 22.49 -0.46 -2
Sociedad Quimica Y Minera De Chile SA ADR 46.86 -0.87 -1.82
Ecolab Inc 134.11 -2.33 -1.71
Stepan Co 83.37 -1.36 -1.61
Venator Materials PLC 18.35 -0.3 -1.61
Phillips 66 94.68 -1.49 -1.55
Andeavor 100.89 -1.52 -1.48
PQ Group Holdings Inc 14.04 -0.21 -1.47
PBF Energy Inc Class A 33.25 -0.46 -1.35
Occidental Petroleum Corp 65.19 -0.85 -1.28
Axalta Coating Systems Ltd 30.22 -0.39 -1.26
Bunge Ltd 72.04 -0.92 -1.26
Westlake Chemical Partners LP 22.83 -0.23 -0.98
DCP Midstream LP 34.41 -0.31 -0.88
Olin Corp 30.6 -0.19 -0.62
Marathon Petroleum Corp 72.94 -0.29 -0.4
A. Schulman Inc 43.28 -0.03 -0.06

Source: Morningstar

Additional reporting by Joseph Chang

Image below shows a container ship. (Source: Al Greenwood)
By Al Greenwood