SINGAPORE (ICIS)–Asian shares rebounded on Tuesday, staging a relief rally after historic losses the previous day, as fresh US economic data for July alleviated recession fears. Meanwhile, oil prices surged by over $1/barrel in early Asian trade, fueled by escalating concerns about the spreading conflict in the Middle East. Japanese Nikkei 225 index jumps 9.55% in early Asian trade Asian petrochemical shares follow regional market rebound, Asahi Kasei gains China’s petrochemical futures continue decline The stronger-than-expected US Institute for Supply Management (ISM) Services Survey for July helped ease growth worries. The overall services purchasing managers’ index (PMI) improved to 51.4 in July, swinging into expansion and beating the consensus for a rise to 51.0 from 48.8 in June. A PMI reading above 50 indicates growth in the services sector. By 02:30 GMT, Japan’s benchmark Nikkei 225 was up 9.55%, South Korea’s KOSPI was 3.07% higher and Hong Kong’s Hang Seng Index rose by 0.06%. Singapore’s Straits Times Index (STI) was down by 0.96% while China’s benchmark Shanghai Composite Index inched 0.20% higher after shedding 1.54% on Monday. Asian petrochemical shares tracked the rebound in regional bourses, with Japanese major Asahi Kasei jumping nearly 14% and South Korean producer LG Chem up by 4.59%. China’s petrochemical futures, however, continued lower in early trade on Tuesday. At 10:30 local time (02:30 GMT), futures of petrochemical commodities, including plastics, methanol and glycols, were trading lower, after losing 0.4-2.1% in the previous session. Product Yuan (CNY)/tonne Change Linear low density polyethylene (LLDPE) 8,231 -0.3% Polyvinyl chloride (PVC) 5,650 -0.5% Ethylene glycol (EG) 4,590 -0.5% Polypropylene (PP) 7,570 -0.4% Styrene monomer (SM) 9,183 -0.2% Paraxylene * 8,120 -0.9% Purified terephthalic acid (PTA)* 5,644 -0.8% Methanol* 2,468 -0.5% Sources: Dalian Commodity Exchange, *Zhengzhou Commodity Exchange The global equity market sell-off intensified on Monday, with a wave of declines sweeping across major bourses worldwide. The rout began in Asia, where the Nikkei 225 index plummeted 12.4% day on day, marking its worst performance since 1987 while the KOSPI posted its steepest decline in its closing price to date. In Europe, the Stoxx Europe 600 index fell 2.2%, with all sectors and major indexes closing in negative territory. Utilities and oil and gas stocks suffered the steepest losses, leading the downturn in European markets. In the US, the Dow Jones Industrial Average plunged by about 1,000 points or down 2.6%, the Nasdaq dived 3.4% and the S&P 500 slid 3.0%. This marked the largest losses since September 2022 for the Dow and S&P, following a downturn late last week due to poor US jobs data and weak manufacturing PMI, which sparked recession fears. The unwinding of the yen “carry trade” after the Bank of Japan raised interest rates last week also added fuel to the retreat in global markets. For now, the US Federal Reserve has no intention of delivering an emergency rate cut before the Federal Open Market Committee (FOMC) meeting on 18 September, Singapore-based DBS Group Research said in a note on Tuesday. “The Fed wants markets to view the coming rate cuts as preserving the soft landing and supporting jobs, not as a delayed response to a weakening economy,” it said. GEOPOLITICAL TENSIONS BOOSTING OILOil prices rose by more than $1/barrel in early Asian trade on Tuesday after dipping in the previous session, driven by supply concerns amid escalating tensions in the Middle East. “Markets are still waiting to see how Iran responds to Israel after it vowed retaliation for the assassination of Hamas’ political leader on Iranian soil,” Dutch banking and financial information services firm ING said in a note. “Oil has been unable to escape the broader risk-off move seen across assets, as concerns grow over the potential for a US recession following some weaker macro data in recent weeks. This only adds to worries over Chinese demand.” Reports that the Sharara oilfield in Libya has completely stopped production due to protests at the site also supported oil prices. This oilfield has a production capacity of 300,000 barrels/day but was producing around 270,000 barrels/day prior to the disruption. Additional reporting by Fanny Zhang Thumbnail photo shows a stock market indicator board (Source: BIANCA DE MARCHI/EPA-EFE/Shutterstock) Focus article by Nurluqman Suratman

SINGAPORE (ICIS)–Soaring Asian styrene prices have grabbed the attention of the global market following unexpected outages at European facilities. This price surge is expected to support both upstream benzene prices as well as downstream prices of expanded polystyrene (EPS), polystyrene (PS), and acrylonitrile butadiene styrene (ABS). Two styrene plant outages in Europe drive price surge upward rapidly. Benzene prices rise with styrene, boosted by August demand growth. ICIS expects EPS and PS prices to rise in August, ABS prices to remain flat due to the butadiene prices decreasing. In this podcast, ICIS senior analysts Jenny Yi and Jimmy Zhang discuss the trends and outlook for the Asian styrenic and benzene markets.

HOUSTON (ICIS)–There is now 88% of the corn acreage silking with soybean blooming having increased to 86%, according to the latest US Department of Agriculture (USDA) weekly crop progress report. For corn, the current rate of silking is slightly behind the 90% level achieved in 2023 but is equal to the five-year average of 88%. The amount of crop at the dough stage has risen to 46%, which is above both the 42% level from last year and the five-year average of 38%. In the first update on corn which has reached the dented phase, the progress report showed there is 7% of the crop at this stage, which is equal to the 7% mark from 2023 and above the five-year average of 5%. Regarding corn conditions, there is 3% rated very poor with 7% now listed as poor. There remains 23% considered fair with 51% now seen as good and 16% as excellent. For soybeans, there is 86% of the crop now blooming, which is less than the 2023 level of 88% but is ahead of the five-year average of 84%. The amount of acreage setting pods increased to 59%, which trails the 61% from last year, but is above the five-year average of 56%. For soybean conditions, there is still 2% listed as very poor and 6% as poor. There is now 24% rated as fair with 54% continuing to be seen as good and 14% as excellent. In harvesting updates, winter wheat is now at 88% completed, which is ahead of the 85% from 2023 and the five-year average of 86%. Spring wheat harvest is now at 6% completed, which is behind both the 8% from last year and the five-year average of 10%.

HOUSTON (ICIS)–Shares of US-listed chemical companies fell sharply for the third consecutive trading day on Monday amid growing concerns that the US economy could head towards a hard landing and enter a recession. The following table shows the major indices followed by ICIS. Index 5-Aug Change % Dow Jones Industrial Average 38,703.27 -1,033.99 -2.60% S&P 500 5,186.33 -160.23 -3.00% Dow Jones US Chemicals Index 860.73 -19.78 -2.25% S&P 500 Chemicals Industry Index 897.91 -19.43 -2.12% Other market indicators also showed distress. The volatility index (VIX) rose by more than 43% to 33.57, reaching its highest level since the COVID-19 pandemic, according to the financial news network CNBC. The yield on the 10-year Treasury note fell to 3.8%, its lowest level in more than a year. Brent crude oil futures fell farther below $80/barrel. Natural gas futures fell farther below $2/MMBtu. Earlier on Monday, stocks in Asia and Europe were also sharply down, with Japan’s benchmark Nikkei 225 posting exceptionally steep losses. The financial press concentrated on Japan and highlighted what is known as the carry trade. Under it, investors took advantage of low interest rates in Japan to fund purchases of riskier investments such as US stocks. The strategy backfired after the Bank of Japan started raising interest rates. CHEM STOCKS PUMMELED IN PAST THREE DAYSThe total losses during the three-day stretch are much worse. The Dow Jones Industrial Average and the S&P 500 have fallen by more than 5% since then. Chemical producers have warned that their performance will get no help from the economy during the second half of the year. They gave up on a recovery, and some pointed to weakness among consumers, particularly those that perform do-it-yourself (DIY) projects on their homes, a segment that is especially sensitive to cost. Other chemical producers either missed their second quarter guidance, lowered their full year guidance or both. Since then, US economic statistics have shown more weakening than what was expected in the market. The US added fewer jobs in July than most economists expected, and the unemployment rate rose to 4.3%. US manufacturing activity shrank for the fourth consecutive month in July, with the purchasing managers’ index (PMI) falling faster than expected. June construction spending fell 0.3% from May. Despite the pessimistic economic news, there were some statistics and trends that were not as poor. The collapse of the 10-year yield on Treasury notes indicates that the Federal Reserve has kept its benchmark federal funds rate too high for too long. That increases the likelihood that the central bank could lower rates at a faster pace. They could fall by half a point during its next scheduled meeting in September, and subsequent cuts could take place in November and December. Meanwhile, following a contraction in June, the US service sector expanded in July, according to the services PMI published by the Institute for Supply Management (ISM). Services make up 7/8 of the US economy. The following table shows the US-listed chemical shares followed by ICIS. Symbol Name $ Current Price $ Change % Change ASIX AdvanSix 24.74 -2.52 -9.24% AVNT Avient 40.395 -2.435 -5.69% AXTA Axalta Coating Systems 33.84 -1.37 -3.89% BAK Braskem 5.45 -0.33 -5.71% CC Chemours 18.565 -1.975 -9.62% CE Celanese 125.73 -5.82 -4.42% DD DuPont 77.15 -1.97 -2.49% DOW Dow 50.52 -1.49 -2.86% EMN Eastman 94.16 -3.33 -3.42% FUL HB Fuller 77.3 -3.92 -4.83% HUN Huntsman 21.27 -1.21 -5.38% KRO Kronos Worldwide 10.2 -0.64 -5.90% LYB LyondellBasell 91.93 -2.46 -2.61% MEOH Methanex 40.22 -2.81 -6.53% NEU NewMarket 530.05 -20.86 -3.79% NGVT Ingevity 35.52 -5.68 -13.79% OLN Olin 40.835 -2.135 -4.97% PPG PPG 120.02 -3.44 -2.79% RPM RPM International 114.305 -3.465 -2.94% SCL Stepan 73.33 -4.73 -6.06% SHW Sherwin-Williams 340.505 -6.745 -1.94% TROX Tronox 12.69 -0.62 -4.66% TSE Trinseo 2.375 -0.215 -8.30% WLK Westlake 132.31 -4.75 -3.47% Focus article by Al Greenwood (recast with closing prices for indices and shares) Additional reporting by Jonathan Lopez Thumbnail image shows a stock exchange. Image by Costfoto/NurPhoto/Shutterstock Please also visit Macroeconomics: Impact on Chemicals

MADRID (ICIS)–US stocks were trading down around 3% mid-morning on Monday, with the major chemical companies posting double-digit falls on growing fears about a recession after the world’s largest economy reported weak economic data. Falls in the main stocks, however, had moderated by mid-morning although major individual names were still seeing large losses. The following shows the performance of the major stock indices followed by ICIS. Index 5 August Change % Dow Jones Industrial Average 38,629.93 1,107.33 2.79% S&P 500 5,171.95 174.61 3.27% Dow Jones US Chemicals Index 858.78 21.73 2.47% S&P 500 Chemicals Industry Index 896.31 21.03 2.29% Individual names in the US chemical sector were seeing double-digit losses – Trinseo, Ingevity and Chemours – with majors such as Dow and DuPont down around 3% (See table below). Earlier on Monday, stocks in Asia – with Japan’s benchmark Nikkei 225 posting its largest ever loss – and Europe were also sharply down. Crude prices also took a hit with the international Brent benchmark down more than $1/barrel to $75.74/barrel. MANUFACTRING DOWNTURN, WIDER WOES |A recession will hit the US beleaguered manufacturing sector further – after more than a year in the doldrums compounded by weak data in July. Employment data last week revealed lower-than-expected job growth and higher unemployment, sparking alarm among global investors about the health of the US economy. The equity market reaction on Monday was brutal in Asia, but was less pronounced in Europe and in the Americas. The slowing fall in some US indices on Monday could be linked to the much-awaited services PMI index for July, which showed that the sector is still expanding. “Economic activity in the services sector expanded in July, a trend that has been interrupted only three times — though twice in the last four months — since early in the coronavirus pandemic,” said the Institute for Supply Management (ISM), which compiles the index. “The services PMI registered 51.4%, indicating sector expansion for the 47th time in 50 months.” Any reading above 50% suggests that the sector is in expansion. Analysts are questioning whether the market reaction had been overblown, with some linking it to possible wild speculative moves in August when market activity slows sharply. “Weak payrolls [have] really escalated a profound move across the globe. However, the reality is that although payrolls was disappointing it’s hard to know how disappointing given the distortions from Hurricane Beryl. It’s like the market has added up 2+2 and made nine,” said Jim Reid, Deutsche Bank’s global head of economic research. “It’s easily possible we’ll get the additional three and two to make up the total but we’re certainly not there yet. It’s hard to believe such market moves would have occurred in any other month.” Symbol Name Price Change Change % ASIX AdvanSix 24.66 -2.60 -9.54% AVNT Avient 40.29 -2.54 -5.93% AXTA Axalta Coating Systems 33.645 -1.565 -4.44% BAK Braskem 5.435 -0.345 -5.97% CC Chemours 18.53 -2.01 -9.79% CE Celanese 125.31 -6.24 -4.74% DD DuPont 76.75 -2.37 -3.00% DOW Dow 50.56 -1.45 -2.79% EMN Eastman 93.74 -3.75 -3.85% FUL HB Fuller 77.225 -3.995 -4.92% HUN Huntsman 21.29 -1.19 -5.29% KRO Kronos Worldwide 10.28 -0.56 -5.17% LYB LyondellBasell 92.42 -1.97 -2.09% MEOH Methanex 40.29 -2.74 -6.37% NEU NewMarket 528.67 -22.24 -4.04% NGVT Ingevity 35.375 -5.825 -14.14% OLN Olin 40.785 -2.185 -5.08% PPG PPG 119.18 -4.28 -3.47% RPM RPM International 114.03 -3.74 -3.18% SCL Stepan 73.385 -4.675 -5.99% SHW Sherwin-Williams 338.27 -8.98 -2.59% TROX Tronox 12.65 -0.66 -4.96% TSE Trinseo 2.29 -0.30 -11.58% WLK Westlake 131.42 -5.64 -4.11% Front page picture: A stock exchange in Hangzhou, Zhejiang Province, China; archive image Source: Costfoto/NurPhoto/Shutterstock

HOUSTON (ICIS)–Here are the top stories from ICIS News from the week ended 2 August. Massive North America PE growth wave is over through 2027 – LyondellBasell The massive shale gas-driven expansion in polyethylene (PE) and to a more limited extent in polypropylene (PP) has ended, boding well for operating rates and profitability moving forward through 2027, said executives at LyondellBasell. INSIGHT: US chems face poor trade prospects under presidential candidates Regardless of who wins the next presidential election, US chemical producers may see little benefit from the trade policies of either candidate, with one exposing them to retaliatory tariffs and the second likely continuing the policies of the current administration. INSIGHT: US Fed moves closer to rate cuts, paving way for chemicals demand recovery The US chemical industry, along with other interest-rate sensitive sectors, is poised to get a lift as the US Federal Reserve moves closer towards its first interest rate cut – a move increasingly likely in September. INSIGHT OUTLOOK: LatAm petchems producers hope protectionism, higher freight costs improve margins Latin American petrochemicals prices remain in the doldrums due to global oversupply, but domestic producers are hoping a sustained increase in freight costs and protectionist measures could start improving their dented market share. OUTLOOK: US recycled plastics weather mixed demand, new capacity as pivotal year, 2025, approaches Although the broader US recycled plastics market has yet to see the full recovery as hoped by this time, there still remain opportunities and challenges through year end. INSIGHT: More US chem firms give up on H2 recovery So far in the earnings season, US chemical producers have given up on a second half recovery and will rely on their own actions to increase earnings while they wait for interest rates to fall.

LONDON (ICIS)–Click here to see the latest blog post on Chemicals & The Economy by Paul Hodges, which looks at the long-term decline in the global smartphone market, and how Apple has now lost its top five position in China – despite offering $300 discounts. Editor’s note: This blog post is an opinion piece. The views expressed are those of the author and do not necessarily represent those of ICIS. Paul Hodges is the chairman of consultants New Normal Consulting.

LONDON (ICIS)–Chemical stocks in Europe slumped in early trading on Monday after a market rout in Asia following bearish US economic data at the end of last week prompted fears of a slowdown. US recession fears grew after spate of weak economic data on 2 August, showing a sputtering jobs market, an accelerating decline in manufactured goods demand and higher unemployment. The US added 114,000 new jobs in July, significantly below market expectations, while unemployment rose 0.2 percentage points the same month to 4.3%. “The bottom line is that the labor market, and by extension the economy, is slowing,” said ICIS senior economist Kevin Swift, commenting on Friday. On Friday, US Census Bureau data also showed that new US manufacturing sector orders had fallen in June for the second consecutive month, dropping 3.3% after a 0.5% decline in May. US manufacturing orders have declined since returning to growth in February, with growth falling from 1.4% that month to 0.7% in March and 0.4% in April, before dropping back into contraction territory in May. Signs of slowing US growth as well as escalating tensions in the Middle East after the death of a Hamas leader in Iran and missile fire between Israel and Lebanon, stoked economic anxiety and led to a slump of 12.4% for Japan’s benchmark Nikkei 225 index at close. Crude benchmarks Brent and WTI were also down over $1/bbl in early trading in Europe on Monday. “Everything is about to break to pieces… except maybe gold,” said a styrene distributor on Monday. The sell-off was less dramatic in Europe, with most key bourses shedding 2% of more of their value as of 12:24 BST. The UK’s FTSE 250 index and Italy’s FTSE MIB saw the sharpest falls, dropping 3.22% and 3.04% respectively in noon trading, and the STOXX Europe 50 index and Germany’s DAX suffering similar declines. US technology stocks in particular have been punished amid growing Wall Street skepticism about profitability in the growing artificial intelligence (AI) space, with Amazon closing down 8.78% on Friday and Microsoft shares down 2.07%. Markets, already volatile in the wake of Middle East tensions, a slowing eurozone recovery and the aftermath of Hurricane Beryl in the US, took fright at below-forecast employment data, but the response so far has been dramatic, according to Deutsche Bank. “Weak payrolls [have] really escalated a profound move across the globe. However the reality is that although payrolls was disappointing it’s hard to know how disappointing given the distortions from Hurricane Beryl. It’s like the market has added up 2+2 and made nine,” said Jim Reid, Deutche Bank’s global head of economic research. “It’s easily possible we’ll get the additional three and two to make up the total but we’re certainly not there yet. It’s hard to believe such market moves would have occurred in any other month,” he added. US GDP jumped higher than expected in Q2, increasing 2.8% compared to 1.4% in the first three months of the year, but recessionary fears loom, employment and productivity figures can be a bellwether of trouble to come. “True recessions start when “reflexivity” in the jobs market kicks in: weaker demand leads to less hiring and more firing, which feeds back into weaker demand, creating a vicious cycle that is only broken with policy support,” said analysts at Capital Dynamics in an investor note. The STOXX 600 chemicals index was trading down 1.89% as of 12:24 BST, with OCI the biggest loser with a 9.34% decline compared to Friday’s close. Arkema and LANXESS also saw substantial declines, with shares falling 4.53% and 4.56% respectively. Focus article by Tom Brown. Thumbnail photo: Outside the New York Stock Exchange. Source: Erik Pendzich/Shutterstock

LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 2 August. Freight headache distracts from Europe’s PE, PP existential crisis Europe may be insulated from ballooning global supply of polyethylene (PE) and polypropylene (PP) in the second half of 2024, as spiking Asian freight costs are the latest pain point to disrupt trade flows. Balanced to tight conditions could persist for Europe BD in H2 2024 European butadiene (BD) market fundamentals are likely to remain in a balanced to tight position for much of the remainder of 2024. Europe base oils Group II/Group III expectations heavily dependent on import logistics for H2 The European Group II and Group III outlooks for the second half of 2024 center strongly on imports, with several logistical issues across the globe throwing some uncertainty onto the markets. Europe H2 ethylene, propylene won’t be a repeat of H2 2023, may be better than expected The second half of 2024 is looking brighter for Europe olefins markets compared to the same periods in 2022 and 2023. No demand crashes are expected, and there are several supportive factors that could make H2 2024 better than initially anticipated. Europe PVC uncertainty continues on weak demand, new antidumping charges on imports The European polyvinyl chloride (PVC) market faces a period of uncertainty in H2 2024, compounding the difficulties in long-term outlook since the coronavirus pandemic began in 2020, and only slightly mitigated by antidumping charges for US and Egyptian imports.