US chem shares mixed as oil prices reach 18-year lows
2020-03-31    [Source:ICIS]

    Shares of US-listed chemical companies were mixed on Monday as oil prices reached 18-year lows.

    Brent crude oil futures for May settled at $22.76/bbl, down by $2.17/bbl. WTI settled at $20.09/bbl, down by $1.42/bbl.

    US stock markets rose, as shown below by the indices followed by ICIS.

  30-Mar Change %
Dow Jones Industrial Average 22,327.48 690.70 3.19
S&P 500 2,626.65 85.18 3.35
Dow Jones US Chemicals Index 469.63 15.34 3.38
S&P 500 Chemicals Industry Index 476.20 16.75 3.65

    Stock markets have been exceptionally volatile for more than a month. Starting on 24 February, the Dow Jones Industrial Average has swung by at least 2% in 21 of the past 26 trading sessions.

    The coronavirus (Covid-19) has caused much of this volatility as it continues to spread in the US and the rest of the world.

    The following shows the cases in the US.

US 27-Mar 30-Mar
Cases 85,356 140,904
Death 1,246 2,405
States 50 50

    Source: US Centers for Disease Control and Prevention (CDC)

    The following shows the cases in the world.

World 27-Mar 30-Mar
Cases 509,164 693,224
Death 23,335 33,106
Nations 201 202

    Source: World Health Organization (WHO)

    The coronavirus is one of the reasons behind the decline in oil prices. The travel restrictions imposed to limit the spread of the disease has caused a decline in fuel demand.

    US refiner PBF Energy is running its units a minimum rates because of the decline in demand.

    Another factor dragging down oil prices is the end of a production-cut agreement between OPEC and Russia. Starting on 1 April, they will have no constraints on oil production.

    At such low prices, companies cannot replace oil, said Dow CEO Jim Fitterling. A price of $55-60/bbl is more sustainable.

    The combination of rising supply and falling demand has led to concerns that the world would run out of storage, forcing high-cost wells to shut-in.

    Petrochemical and polymer prices tend to follow crude oil with a time lag of about six weeks, according to the ICIS Petrochemical Index (IPEX). The index tracks 12 major petrochemicals and polymers.

    In North America, ethylene spot prices remain at 34-year lows, according to the ICIS margins analysis. March contracts for propylene settled at an 11-year low.

    In Europe, chemical stocks and bourses rose despite the drop in oil prices.

    In Asia, shares in petrochemical companies fell sharply.

    China's politburo - its top policymaking body - in a meeting on 27 March said that it is ready to push out a slew of measures to counter shocks from the coronavirus pandemic.

    The following shows the US-listed companies followed by ICIS.

  $ Current
$ Change % Change
AdvanSix 8.33 -0.62 -6.88
Axalta Coating Systems 17.77 0.08 0.45
Braskem 6.76 -0.30 -4.25
Celanese 73.62 2.35 3.30
Dow 28.62 0.06 0.21
DuPont 33.33 -0.50 -1.48
Eastman 47.56 1.09 2.35
HB Fuller 27.67 0.88 3.28
Huntsman 14.03 -0.21 -1.47
Ingevity 33.82 0.35 1.05
Kraton 8.56 1.90 28.53
Kronos Worldwide 8.59 0.36 4.31
LyondellBasell 49.54 0.14 0.28
Methanex 12.19 -0.03 -0.25
NewMarket 398.16 29.82 8.10
Olin 11.70 0.22 1.92
PolyOne 18.62 1.06 6.04
PPG 85.23 0.23 0.27
RPM International 60.84 0.87 1.45
Sherwin-Williams 479.79 20.13 4.38
Stepan 86.28 7.73 9.84
Chemours 9.64 0.13 1.31
Trinseo 18.70 -0.38 -1.97
Tronox 5.62 0.29 5.36
Univar 10.98 0.48 4.57
Venator Materials 1.72 -0.08 -4.44
Westlake Chemical 37.98 -0.88 -2.26

    Additional reporting by Alex Snodgrass, Joseph Chang, Jonathan Lopez and Nurluqman Suratman

    Author: Al Greenwood

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