Weekly Thematic

Stagnation – The Worst Scenario?
June 26, 2020
Companies Mentioned:
HB Fuller, Trinseo, Olin, ASIX, Axalta, IFF, DuPont, Huntsman
Commodities Mentioned:
Subjects Covered:
COVID, Economic Stagnation, China, Overcapacity, Refining, Debt and Liquidity Risk, Project Delays, Plant Closures, Packaging, Automotive

C-MACC Perspectives No 20

 

Stagnation – The Worst Scenario?

  • The spread and re-emergence of COVID suggests that the “one (and done) wave” thesis was hopeful. We now likely must live with COVID and protect against it until a vaccine is effective, available and widely used.  Until then we live differently   
  • This raises the possibility of economic stagnation for a few years, with government stimulus perhaps preventing a deep recession/depression, but not driving growth. Continued high unemployment globally, credit issues and a subdued/depressed consumer all bode poorly for chemicals.  
  • With the possibility of prolonged risks to margins and volumes we would avoid companies with a lot of debt and/or a durable focus. HB Fuller, Trinseo, Olin, ASIX and Axalta would be on our watch-list.

See PDF below for all charts referenced

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