Citi says it's constructive on European chemicals ahead of cyclical recovery

Elkem ASA

08/04/2024 10:16

** Citi says it is "constructive but not outright bullish"
on European chemicals makers, as it weighs the start of a
potential volume recovery against structural concerns
    ** China becoming self-sufficient in chemicals will drive
oversupply, the broker warns
    ** It says Elkem  ELK.OL  ("neutral") will struggle slightly
as the silicones it specialises in are particularly oversupplied
    ** Citi raises Evonik  EVKn.DE  to "buy" from "neutral",
saying its industrial business will benefit from a cyclical
recovery and noting its key product methionine is one of the few
chemicals in relatively short supply
    ** It raises Wacker Chemie  WCHG.DE  to "buy" from "sell",
saying U.S. and German government support should help its
polysilicone business, while the U.S. Uyghur Forced Labor
Prevention Act drives demand for non-Chinese polysilicones
    ** It upgrades Clariant  CLN.S  to "buy" from "neutral" on
recovery in industrial end-markets and cost saving measures
    ** Citi downgrades Arkema  AKE.PA  to "neutral" from "buy",
as its product mix leaves it less able to benefit from higher
cyclical demand
    ** The broker says Lanxess's ("neutral") shares are the
cheapest of all, but its high exposure to agriculture and
construction end-markets limits chances for cyclical recovery

 (Reporting by Louis van Boxel-Woolf)
 ((Louis.vanBoxel-Woolf@thomsonreuters.com))