Live Markets: Disregard European chemicals' Q2 earnings beats

Brenntag SE

23/06/2026 12:54

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DISREGARD EUROPEAN CHEMICALS' Q2 EARNINGS BEATS 
European chemicals companies are likely to deliver second quarter earnings beats, but JPMorgan analysts say investors should look through these and focus on the sector's structural headwinds of significant overcapacity and intensifying competition. 

    Chemical stocks were one of the few winners in Europe from the war in the Gulf and the closure of the Strait of Hormuz — trading above their prewar levels by early April .SX4P — as supply disruptions raised costs ‌for Asian rivals and customers prioritise reliability over price.
But while that is showing up in Q2 earnings, investors must avoid mechanically including that in their longer-term expectations. 
"Management teams may guide conservatively for 2H26 even if they deliver 2Q beats," said the JPMorgan analysts in a note. 
They say, as an example, Brenntag BNRGn.DE in its trading update Monday evening guided second quarter adjusted EBITDA to 22% above consensus, but the midpoint of its full year 2026 guidance is 12% below consensus. 
JPMorgan say they see substantial downside risk to second half 2026 and 2027 earnings across much of the cyclical chemicals industry. 
They say the Strait of Hormuz reopening is expected to drive further normalisation of supply chains which should contribute to pressure on chemical prices and spreads. Margins for several commodity chemical products in China, which typically lead other regions, are already below pre-conflict levels. 
Excluding panic buying, the latest data also shows underlying demand for chemicals has remained weak, and volumes should soften in the third quarter. 
(Alun John)
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