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A pessimistic-sounding sector study by Morgan Stanley cost stocks another share of the previous day’s generous gains.
BASF and Covestro’s DAX shares and those of MDAX members LANXESS and WACKER CHEMIE have fallen by more than two percent at times. In the end, the BASF share lost 3.99 percent to 41.47 euros and the Covestro share 3.52 percent to 32.10 euros.
Evonik also fell 3.31 percent after being demoted to equal weight by Morgan Stanley.
After six quarters of tailwind, momentum for the chemical industry appears to be turning, analyst Charles Webb wrote in his study. Demand is ebbing, inventories are being reduced and margins are under pressure.
He doesn’t want to give up hope completely, though: a lot has already been priced in, so there’s definitely tactical recovery potential by the end of the year. He wrote about Evonik that the stock no longer offers extraordinary upside potential.
The day before, the stocks from the chemical sector, which is considered particularly energy-intensive, were still driven by the proposals of the Gas and Heat Expert Committee. At the top of the DAX, Covestro eventually rose by 8.2 percent and BASF by more than six percent.
Goldman Sachs analyst Georgina Fraser sees the two DAX companies as the biggest beneficiaries of Germany’s chemical companies given the proposals.
BASF to build neopentyl glycol plant in China
BASF is building a new plant for the production of neopentyl glycol (NPG) in China. The plant is to produce 80,000 tons of NPG annually at the new BASF Verbund site in Zhanjiang, China, as the chemical company announced. With this, BASF wants to respond to the growing demand from customers in China, the world’s largest chemical market.
The new factory is expected to be commissioned in the fourth quarter of 2025. This will increase BASF’s NPG production capacity worldwide from 255,000 tons to 335,000 tons per year.
According to the announcement, NPG is a chemical intermediate, for example in the manufacture of powder coatings, which are mainly used in the construction sector and for coating household appliances. According to BASF, using powder coatings can reduce volatile organic compound (VOC) emissions by up to 50 percent and make it easier to meet emissions standards. In addition, NPG is used for lubricants, plasticizers and medicines, for example as a chemical building block in the synthesis of hormones, cardiovascular medicines and painkillers.
BASF already produces NPG in Ludwigshafen, Freeport/USA, as well as Nanjing and Jilin in China.
FRANKFURT (dpa-AFX / Dow Jones)
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