Chemicals: Earnings Outlook (Apr-Jun)

Research evidence excerpt

Chemicals: Earnings Outlook (Apr-Jun)

J P M O R G A N Asia Pacific Equity Research

07 July 2026

Chemicals: Earnings Outlook

(Apr-Jun)

Shift in preference from upstream to downstream

Companies in the chemical sector will begin announcing results for April–June Japan Equity Research

(1Q FY3/27 or 2Q FY12/26) on July 24, starting with Shin-Etsu Chemical. The

Chemical, Steel

sharp price increases and procurement concerns for crude oil and naphtha due to

the effective closure of the Strait of Hormuz (discussed in our Chemicals: Earnings Yasuhiro Nakada AC

Outlook (Jan-Mar) report) are now easing. Consequently, we expect spreads for (81-3) 6736-8692

yasuhiro.nakada@jpmorgan.com

diversified chemicals positioned upstream in the petrochemical supply chain to JPMorgan Securities Japan Co., Ltd.

move in the opposite direction as spreads for downstream specialty chemicals, and

believe this could affect share price trends. With the announcement of April–June

results, we expect a more positive view of downstream companies and negative

view of upstream companies.

• Specialty chemicals: We expect Nippon Paint Holdings to undergo a rerating

after April–June results. Specialty chemicals companies, which are positioned

downstream in the petrochemical supply chain, faced greater pressure from

expected higher costs in April–June, raising concerns about spread

deterioration due to the time needed to pass these costs through to product

prices. However, we expect spreads to improve from July–September as raw

material prices peak out and companies make progress in adjusting product

prices. We think B2C paints are more likely to maintain price hikes than

products subject to pricing formulas based on raw material prices, and we take

a positive view of this point.