Few Catalysts, Few Booms – Mostly Slow Reactions!

Global chemical end-market demand has proven weaker than expected in 1Q25, and margins are primarily under pressure – we discuss US chemical sector and sub-sector equity performance and provide our outlooks.
We highlight Westlake before its 4Q24 results next week, as its equity has trended more with US commodity producers than downstream building product peers – improving housing conditions in 2025 could change this.
We discuss BASF, as the company has already provided preliminary 4Q24 results, which should steer investors’ focus next week from 4Q results to its business restructurings, potential divestments, and efforts to lift returns.
We provide views on recent US chemical sub-sector equity performance and why we are more constructive in some areas than others, considering our view of 2025 sector returns and market developments in 2026/27.
Otherwise, we discuss our more positive view on corn and crop input suppliers relative to crop buyers, recent movements in US, Europe, and Asia polyethylene markets, and our recent hydrogen and sustainability research.

Companies Mentioned: Westlake, The AZEK Company, Formosa Plastics, Shin-Etsu, Occidental, BASF, Dow, Huntsman, Covestro, ExxonMobil, Phillips 66, Nova Chemicals, Repsol, Enterprise Products, Versalis, LG Chem, Sumitomo, Borouge, SABIC, Air Products, Air Liquide, Linde, Celanese, Eastman, DuPont, Vopak, Nutrien, CF Industries, LSB Industries, Yara, Fertiglobe, Corteva, FMC
Products Mentioned: Polyvinyl Chloride, Polyethylene, Ethylene, Ethane, Ammonia, Hydrogen, Natural Gas, Crude Oil

Exhibit 1: BASF and Westlake have underperformed since 2024; more favorable factors could arise for both in 2025.