Cyclical chemical sector 'blues' to return, JPM warns

LANXESS AG

22/05/2026 12:42

** J.P. Morgan says market sentiment towards cyclical chemical stocks is turning negative again, as recent data suggests any near-term tailwinds may be smaller than expected

** “We expect investors to look through potential 2Q earnings strength/beats as a weaker 2H26 and 2027 earnings outlook brings structural challenges back into focus,” JPM says

** It places BASF BASFn.DE ("underweight") on a negative catalyst watch into Q2 results, as the broker's estimates indicate a downside risk versus consensus in the second half of 2026

** JPM downgrades Evonik EVKn.DE, Arkema AKE.PA and IMCD IMCD.AS, to "underweight" from "neutral" and Lanxess to "neutral" from "overweight"

** It keeps negative catalyst watch on Wacker Chemie WCHG.DE, which remains at "underweight" alongside Yara YAR.OL, Brenntag BNRGn.DE and DSM-Firmenich DSFIR.AS

** The broker upgrades Clariant CLN.S to "overweight" from "neutral", saying it sees its discounted valuation as an attractive entry point into the stock

** Shares of Lanxess and IMCD are down around 2%, while Clariant rises more than 5%

** Novonesis NSISb.CO remains JPM's top pick, followed by other preferred long plays Croda CRDA.L, Umicore UMI.BR, Syensqo SYENS.BR and Fuchs FPEn.DE (all "overweight")

(Reporting by Orest Dovhan )

((Orest.Dovhan@thomsonreuters.com))