Before we take a look at how plastic materials stocks did in 2015, let's go to a happy place where we can pretend like the first two weeks of 2016 didn't happen. We need to do so because in that brief period the U.S. stock market fell almost 6 percent.
OK. Are we there? Good. Because 2015 was hard enough for materials stocks to handle. For the year, 12 of the 15 materials stocks tracked by Plastics News saw their per-share prices take a dive. And of the 12 that fell, 11 saw their prices swoon by double digits.
The Dow Jones Industrial Average dipped 2.2 percent for the year, but lower commodity prices, weak demand and the effects of a stronger dollar magnified the blow for many materials stocks.
First, the lucky ones.
Optimism over its pending merger with DuPont Co. allowed materials giant Dow Chemical Co. to enjoy a 12.7 percent stock price rise in 2015. Composite materials maker Hexcel Corp. celebrated a 12.5 percent share price jump and global polyolefins leader LyondellBasell Industries finished the year up 8.5 percent.
DuPont's pending deal with Dow limited its stock drop to just under 5 percent. Elsewhere, things got worse in a hurry. Per-share price drops of 11 to 20 percent for full-year 2015 took place at Kraton Performance Polymers, Westlake Chemical Corp., Eastman Chemical Co., Celanese Corp. and PolyOne Corp.
Share prices at A. Schulman Inc. declined almost 23 percent for the year, while price levels at Omnova Solutions dipped more than 25 percent. A plunge of just over 35 percent was seen at Rogers Corp.
Unfortunately for Huntsman Corp. and Axiall Corp., a 35 percent price decline would have been welcome. Huntsman's per-share price fell almost 51 percent, with Axiall stock taking a dizzying slide of just over 64 percent.
(Chemours Corp. — a DuPont spinoff — went public mid-year, but still managed to drop almost 68 percent from early July through the end of 2015.)
Are better days ahead in 2016? Market analyst Travis Hoium at the Motley Fool website on Jan. 6 listed Dow as a materials stock that could perform well this year. After merging with DuPont, the combined firm will be split into three separate companies. The largest of the three will include plastics and will have annual sales of around $50 billion.
“In theory, three hyper-focused businesses will be better off than two diverse and unfocused businesses,” Hoium wrote. “This should also lead to greater profitability for Dow investors in the long run. It could take some time to see the full benefit of the merger, but I think in 2016 we'll see some fruit.”
But other materials firms could continue to face challenges. “Materials stocks have been under a variety of pressures over the past few years that have hurt stocks,” Hoium added. “Competition from Asia is heating up, demand for many products has dropped as global construction has slowed, and a strong dollar is hurting earnings for U.S. companies.”
If those conditions don't change, executives at many plastics materials firms may want to buy their 2017 calendars early — and dream of better days.