June Chemical Spreads - Normalisation Underway

Research evidence excerpt

June Chemical Spreads - Normalisation Underway

Global | Chemicals EquityJuneResearch11, 2026

Exhibit 1 - BASF Upstream MonthlyJune Chemical Spreads - Normalisation

Profitability

900Underway 800

500Spreads have significantly rolled over from mid-April, down ~12%, signalling 400

300that normalisation is underway. Europe led the move with a more 200

pronounced decline (~15%), whilst North America saw -9% reductions on Total Profit - BASF (€ mn) Mid Cycle Profit Level

average. Focus now turns to the pace of pricing unwind and the durability of .Source: Jefferies Research, Company Data, Bloomberg,

Factset, ICIS, PU Daily

demand into H2, as inflation feeds through to test end market strength. For

BASF, spreads are down ~25% from recent peaks and now sit ~1% below

mid-cycle.

Using this note: We apply chemical prices (inputs vs outputs using the appropriate chemical

ratio) to the production footprints across our chemical coverage. We assume the company-

plant footprints operate at 90% utilisation rates to ascertain gross margins (mark to market)

and movements across our European and North American Chemical coverage universe.

Importantly, we do not adjust for outages/force majeure, or other production costs in this

analysis. We believe it provides the greatest insight into profitability movements across the

sector due to product price/raw material changes.

Spread normalisation is now underway. Spreads have started to normalise following the

sharp Hormuz-related uplift, with June indicating an average 12% decline since mid-April.

Europe led the move with a more pronounced decline (~15%), whilst North America saw -9%

reductions on average, with greater dispersion (Methanex +ve, Dow -ve). In both Europe and

the US cracker products led the spread unwind.