Smells Like Trough Spirit: Discipline, Dislocation, and Cyclical Repricing Ahead

2025 increasingly appears to mark the cyclical and structural bottom in construction materials, as collapsing completions and tightening inventories set the stage for affordability-driven recovery catalysts.
Sherwin-Williams’ aggressive share gains contrast with Akzo and RPM’s margin-focused strategies; near-term cost aside, Sherwin looks well positioned to capture eventual DIY volume normalization.
PVC’s stagnation masks tightening dynamics, China’s falling exports, delayed Indian offtake, and Western restructuring suggest firm pricing may emerge amid lean inventories and reawakening demand.
Housing-linked chemical equities will likely re-rate sharply on even modest data inflections, as investors reward any early-cycle visibility, cash discipline, and strategic positioning ahead of volume recovery.
Sector integration, capital-light exits, and decarbonization pivots underscore how supply chains, not capacity, will shape earnings leverage and re-rating potential as policy-linked cycles gain momentum.

Companies Mentioned: Sherwin-Williams, Westlake, Huntsman, Dow, AkzoNobel, RPM, Orbia, Shintech, Lennar, HBIS Group, ArcelorMittal, BP, Fortescue, TotalEnergies, CF Industries, ExxonMobil, Again, Macquarie, BASF, Equinor, Yara, ADM, Green Plains, POET, The Andersons, Valero, Darling Ingredients, FS, Phillips 66, Neste, Andersons, LyondellBasell, Olin, Tesla
Products Mentioned: PVC, Polyethylene (PE), Polypropylene (PP), Methanol, Acetyls, Ammonia, Ethanol, Renewable Diesel, Soybean, SAF (Sustainable Aviation Fuel), Corn, Hydrogen, Steel, Biofuels, CO₂, Oil, Gas, Carbon Credits, Rare Earths, Batteries, Fertilizer, Electric Vehicles (EVs), Diesel, Petrol

Exhibit 1: US homebuilder confidence remains near multi-year lows; signs of improvement are likely ahead, in our view.