Monthly Thematic Piece

C-MACC Perspectives No 5 Margin Call – Pricing Free-fall Likely
March 3, 2020
Products Mentioned:
Coatings, Polyethylene, Ethane, Naphtha, Styrene, Ethylene
Companies Mentioned:
Dow, DuPont, Westlake, Eastman, Albemarle, Covestro, Clariant, Lyondell, BASF, PPG, Sherwin Williams, Olin, ASIX, Kraton, Trinseo, Celanese, Huntsman, Bayer, IFF
Subjects Covered:
Recession, Consumer Demand, Cost Curves, Energy Pricing, Margin Structure, Prior Cycles, Coronavirus, Stocks to Avoid

C-MACC Perspectives No 5

Margin Call – Pricing Free-fall Likely

We see a perfect storm for pricing and margins in the Chemical industry that may also exist in other sectors and expect the next couple of weeks to be a roller-coaster for buyers, sellers and investors – reminiscent of other rapid changes in market dynamics.  The coronavirus has put a huge dent in demand for all but food and medical supplies, and in the more commodity areas inventories have risen sharply.  The recent collapse in energy prices has dramatically lowered costs for the chemical industry leading to likely significant pricing instability in our opinion.  



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