Crop Tops and Crack Spreads: Sentiment’s Seasonal Wardrobe Malfunction

Commodity chemical equities are deeply out of favor today. Yet, global strategic restructuring, cost discipline, and supply exits imply 2026 may look far better than most current outlooks, a positive for equity performance.
Agriculture and ammonia equities have outperformed meaningfully. However, if downward pressure on corn prices persists and ammonia capacity announcements rise, current sentiment levels will likely face challenges.
Markets tend to move before fundamentals turn, and in 2H25, we believe investor sentiment may shift ahead of earnings, rewarding companies that frame 2026 as both a potential pivot point and a reset, not a rebound.
Chemical executives should own 2H25 challenges, focus investor attention on structural improvements, and position for 2026 leadership. We view BASF, Dow, Westlake, and others as viewing it similarly and taking action.
We also discuss how rising US benzene and copper tariffs risk amplifying cost volatility, supply dislocations, and margin pressure in 2H25, potentially misaligning policy intent with industrial competitiveness.

Companies Mentioned: BASF, Covestro, Formosa, Dow, OMV, Shell, CF Industries, Chevron, Envision, Westlake, Huntsman, Eastman, LyondellBasell, ExxonMobil, Freeport McMoRan, Rio Tinto, Motiva, TotalEnergies, Sabic, Lotte Chemical Titan, JG Summit, Long Son Petrochemical, Sinopec, PetroChina, Deere, Bunge, Corteva, Sany, Wan Hai
Products Mentioned: Ammonia, Corn, Nitrogen, Natural Gas, Crude Oil, Ethane, Naphtha, Polyethylene, Benzene, Toluene, Xylenes, Reformate, Styrene, Cumene, Copper, LPG, Soybeans, Wheat, Diesel, Paraxylene, Ethylene, Hydrogen, Steel

Exhibit 1: Are commodity chemical equities positioned for a rebound, and agriculture positioned for a sentiment drop?