FRANKFURT (dpa-AFX) - Following weak price performance this year, experts are also painting a bleak picture for the chemical sector in 2026. Diversified companies are facing structural and economic challenges, Citigroup said on Thursday. Bankhaus Metzler also cited these challenges in its annual outlook as a reason for a more cautious stance.
The European sector index Stoxx Europe 600 Chemicals has lost eight percent of its value so far in 2025, making it the second-biggest sector loser after the media sector in an otherwise favorable market environment.
After all, the DAX has gained more than 21 percent this year. However, many German chemical stocks are down for the year, led by Lanxess and Evonik with losses of up to 27 percent.
Against this backdrop, the slight gains achieved by the sector on Thursday despite the skeptical voices come as no great surprise. BASF is looking relatively good, with the Ludwigshafen-based company's shares rising by two percent on Thursday and an "exotic" price increase of almost four percent in 2025. Citigroup names BASF as its preferred stock among diversified chemical companies for 2026. However, this is offset by a downgrade by Metzler – together with Lanxess.
In his study, Metzler analyst Thomas Schulte-Vorwick assumes that weak cyclical demand, ongoing overcapacity in China, and the structurally high cost base in Europe will continue to pose problems for European chemical companies in 2026.
It is currently unclear what the "new normal" will look like in terms of profitability, and the expert therefore sees only moderate potential for recovery. In this difficult environment, he prefers a defensive strategy with shares in lubricant manufacturer Fuchs SE as his "top pick" and a confirmed buy recommendation for Symrise, a manufacturer of fragrances and flavors.
Citi analyst Sebastian Satz estimates the risk to expectations for operating profit development (EBITDA) in the sector in 2026 at an average of three percent. However, this is already reflected in share prices. In his study, Satz focused on the potential for surprises from individual companies, mentioning BASF in particular. The new Verbund site in China could make the Ludwigshafen-based company the main beneficiary of geopolitical strategies, which he says include protectionist measures by the EU.
Satz still sees attractive investment opportunities in Arkema and Evonik, even though both lack short-term price drivers. He strongly advises against Solvay and Wacker Chemie.
The Citigroup expert downgraded Clariant to "neutral," while he now also rates Covestro as "neutral" following the completion of its acquisition by the Abu Dhabi state-owned company Adnoc./tih/mis/nas
