European Chemicals Update – Q4 2020

In this edition of Duff & Phelps’ European Chemicals Update, we evaluate current trends for key raw materials, prevailing investor sentiment and valuation developments in the featured industrial specialty sub-sector.

Our top insights are detailed below.

Key raw materials in the chemicals sector recovered in Q2/Q3 2020 from the COVID-19 related fall in prices but will likely remain below their pre-COVID-19 levels. The impact of the second wave of COVID-19 cases in Europe will likely continue to suppress Brent crude prices until the end of the year.

Next, the ifo Business Climate Index for the German chemical industry remained negative in Q3 2020, with current conditions rebounding from the lowest level in Q2 2020. Expectations on performance will continue to improve, with companies generally optimistic about the near future and resolving current challenges.

Finally, in the industrial specialty sub-sector, featured companies show diverse performance in market capitalization, with Sika, EMS-Chemie and Wacker Chemie being the best performers, driven by resilient Q3 earnings.