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Crude Oil06-Aug-2024
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 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
Benzene06-Aug-2024
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.
Ammonia05-Aug-2024
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%.
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Ethylene05-Aug-2024
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
Ethylene05-Aug-2024
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
Ethylene05-Aug-2024
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.
Petrochemicals05-Aug-2024
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.
Speciality Chemicals05-Aug-2024
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
Speciality Chemicals05-Aug-2024
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.
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