Sell Chemical Stocks, but Not Because of the Economy or Plastic Bans

| July 22, 2019

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Brokerage firm Nomura downgraded two chemical stocks Monday morning. The big problem for the economically sensitive chemical sector isn’t the economic weakness, though. And it isn’t the specter of single-use plastic bans that could destroy demand far in the future. The problem is oversupply.
Analyst Aleksey Yefremov reduced his rating on LyondellBasell Industriesstock (ticker: LYB) to Neutral—the Nomura equivalent of a Hold rating—from Buy, and cut his price target on the stock to $93 from $107. What's more, he cut his rating on Westlake Chemical stock (WLK) to Reduce—the equivalent of a Sell rating—from Neutral, and trimmed his price target by a dollar to $57, which is 16% below recent levels. He also expressed caution regarding Dow stock (DOW), but maintained his Buy rating, and thinks the shares can hit $53 over the coming months. Still, his target represents only 4% upside from recent levels. Yefremov sees too much plastic-making capacity coming online in the Southern U.S.

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Kemitura A/S

Kemitura is a chemical/technical niche enterprise. During more than 70 years our company has been a trusted advisor for the industry, providing chemicals as well as technical equipment. Our activities have a strong focus on improving environmental impact, safety and ongoing product development in a close collaboration with the companies we are supplying with both products and knowhow. The name Kemitura is a combination of the words (Kemi) and (Futura) (“Kemi” is “Chemistry” in Danish), in other words chemicals for the future. Our name and history gives us a strong sense of responsibility both towards our customers and to ourselves.

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Spotlight

Kemitura A/S

Kemitura is a chemical/technical niche enterprise. During more than 70 years our company has been a trusted advisor for the industry, providing chemicals as well as technical equipment. Our activities have a strong focus on improving environmental impact, safety and ongoing product development in a close collaboration with the companies we are supplying with both products and knowhow. The name Kemitura is a combination of the words (Kemi) and (Futura) (“Kemi” is “Chemistry” in Danish), in other words chemicals for the future. Our name and history gives us a strong sense of responsibility both towards our customers and to ourselves.

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