Baader expects war in Ukraine to severely affect European chemicals

Fuchs Se

08/04/2022 09:43

** Baader Helvea turns more negative on the European
chemicals sector, expecting the chemical cycle to end earlier
than previously expected due to the direct and indirect effects
of the war in Ukraine
    ** The broker expects demand to deteriorate in Q2, saying it
got indications from privately owned companies that the order
book visibility is again getting more volatile and demand
momentum came down in April
    ** Baader expects European chemical companies to cut their
forecasts no sooner than with Q2 reporting
    ** "So far, we do not assume a Russian oil & gas embargo,
but see the probability and therefore the risks of significant
negative supply chain effects increasing," it says
    ** Baader adds the significant price increases of chemical
products will result in negative volume effects in 2023 at the
latest, and therefore in negative margin effects in 2023
    ** "Despite the already significant share price reaction of
most chemical companies, we downgrade 6 companies under our
coverage in this report," the broker says
    ** The broker cuts BASF  BASFn.DE , Covestro  1COV.DE ,
Fuchs Petrolub  FPEn.DE , K+S  SDFGn.DE , Lanxess  LXSG.DE  and
Sika  SIKA.S  to "add" from "buy"


 (Reporting by Bartosz Dabrowski in Gdansk)
 ((bartosz.dabrowski@thomsonreuters.com; +48 58 7696560;))