High Yield Chemicals and Packaging Joined at the Hip

Research evidence excerpt

High Yield Chemicals and Packaging Joined at the Hip

FICC Research

Credit Research

25 June 2026

High Yield Chemicals and Packaging

Joined at the Hip SIGNATURE

It has been a wild ride since March, with giant moves in

chemical pricing creating massive implications for other

sectors, notably packaging. We explore these in chemicals Edward Brucker, CFA +1 212 526 4435

and packaging along with our thoughts on effects of the edward.brucker@barclays.com

Strait reopening. Given the rally, we move HY Packaging to BCI, US

MW from OW. Abanikash+1 212 526 9843Rayaji, CFA

abanikash.rayaji@barclays.com

BCI, US

Overview

The past three months have provided a whirlwind of headlines, coinciding with buffeting effects

on chemical and packaging valuations. The closure of the Strait of Hormuz (and what looks like

a the beginning of a reopening) has created a significant supply chain issue in chemicals and

margin volatility in packaging. We have seen this before: 2021-22 had a massive supply chain

disruption that led to a significant short-term increase in chemical pricing and subsequent raw

material hit for packaging companies. This year is the 2021-22 playbook but on steroids:

stronger and quicker.

Where we find a more-nuanced view is in how companies handled that previous supercycle. For

chemicals, the ones who used the strength to significantly deleverage (Olin, for example) set

themselves up to withstand the subsequent destocking event and prolonged downcycle in

chems. In packaging, those more exposed to raw materials with less passthroughs and that then

worked with customers to implement passthroughs, have withstood this raw material spike

much better (GLT — now Magnera).

We think a similar strategy should be used here. The opportunity provided for chemical