Chemical industry had been a white-hot whole year, but what happened that this trend halted in November?
A sudden downfall in the share of eminent chemical companies was observed this November. Wilmington based Chemours (NYSE: CC) and Stamford based Tronox (NYSE: TROX) chemical companies experienced abrupt drops by ending the month down 9.2 percent and 13.5 percent respectively.
Both these chemical organizations are counted in the top purveyors of pigment and food additive TiO2 (titanium dioxide). While these major purveyors experienced a sudden drop, others remained unaffected such as Huntsman (NYSE: HUN) and Kronos Worldwide (NYSE: KRO), even Kronos having a good month, got hike by 6.1 percent.
What’s the Problem?
Almost every company’s stock price was hit in some ways for different reasons.
The Chemours Company which was founded in July 2015 faced shares dropping problem after the company unveiled third-quarter revenues which in fact beat analysts’ expectations. The revenue was raised by 13 percent over the last year quarter and attuned EBITDA was up striking 42 percent. Investors may have been worried about the Chemours’ long-term debt pressure that has surpassed 4 billion dollars, increased about $500 million since the previous year.
Tronox, the third-largest titanium feedstock producer, experienced a drop in the shares of the company at the end of the month. It might be because of the promises that company made but failed to fulfill. In the month of March, Tronox broadcasted its intention to obtain the TiO2 business of Cristal, but the trouble took place when the merger was put on hold awaiting a verdict from FTC (the Federal Trade Commission). As per Tronox statements, the waiting period was put to expire on December 1, but with no green signal from the Federal Trade Commission (FTC), concerned and nervous investors of the company started to sell Tronox stock. FTC in early December unveiled that it was challenging to merge on antitrust grounds.
Now, What Next?
Though this November both the companies Chemours and Tronox dropped for different factors and reasons, stocks across the whole TiO2 industry have been dropping including Huntsman and Kronos as they are experiencing the drops in December, perhaps because of FTC’s comments that the chemical industry is an oligopoly market form with high barriers to entry.