LIVE MARKETS-A rocky year for European chemicals stocks
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A ROCKY YEAR FOR EUROPEAN CHEMICALS STOCKS
European chemicals stocks have had a rough 2025. Dampened demand, high energy costs, and fresh U.S. tariffs have weighed on the sector, adding to an already murky backdrop.
A basket of chemicals stocks is down .SX4P 7.1% this year and down 14% since mid-June, underperforming the broader market which has risen 15% this year and is up 6.3% since mid June.
The only other basket that has performed as badly is the "media" basket, down 15.8%, but that is smaller by market cap and also a sector seen as an AI loser.
Last week, German chemicals lobby group VCI said it expects orders and sales to stagnate next year, hampered by uncompetitive production costs, high regulatory uncertainty and a slow approval process.
So what are analysts saying about European chemicals as a new year approaches?
Last week, JP Morgan analysts were meeting with U.S. and Canadian investors to talk about just that.
"A few investors we met with sounded optimistic on the prospect of more protectionist measures being implemented by Europe to protect chems and other industrial value chains from Chinese imports," they wrote, flagging BASF as the most commonly discussed name to play these themes, and also good interest in discussing Novonesis, Croda, Akzo and Air Liquide.
But it's not all positive.
In a recent note BofA analysts said feedback from a conference suggested "no green shoots in demand" with Europe fighting for market share against Chinese exports.
"Our proprietary language tool shows Chemical trading conditions deteriorated in Nov with 25% of words positive vs 30% in Oct," they write.
They say they are focussing on companies with under-appreciated asset quality and capital allocation optionality: namely Arkema, Elementis, Fuchs, IMCD & Wacker.
"Structural drivers like health & nutrition keep some growth compounders attractive: AAK, Croda, Givaudan, Novonesis & Symrise."
(Lucy Raitano)
EARLIER ON LIVE MARKETS:
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EUROPEAN SHARES SUBDUED, SET FOR WEEKLY GAIN CLICK HERE
EUROPE BEFORE THE BELL: FUTURES DIP, BOJ HIKES, NIKE SINKS CLICK HERE
JAPAN'S SAVERS GET TO PARTY LIKE IT'S 1999 CLICK HERE
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