Spreads Sheet – Clear signs of fading tailwinds

Research evidence excerpt

Spreads Sheet – Clear signs of fading tailwinds

Equity Research

10 July 2026

European Chemicals & Ingredients

Spreads Sheet – Clear signs of

fading tailwinds

July spread data points to a clear rollover in chemical European Chemicals & Ingredients

margins after the Iran-driven uplift. While current spreads still NEGATIVE

imply upside to BASF's FY26 guidance and a strong Q2, European Chemicals & Ingredients

Anil Shenoy

weakening cracker economics suggest softer H2 +91 (0)22 6175 2487

fundamentals. We maintain an Underweight rating. anil.shenoy@barclays.com

Barclays, UK

Katie Richards

+44 (0)20 3555 0315

Key conclusions kathryn.richards@barclays.com Barclays, UK

• European cracker spreads have declined materially in July, a trend we view as an early

Alex Sloane

indicator of weakness in downstream intermediate chemical spreads. In Asia, cracker margins +44 (0)20 3555 0645

recovered in June from significantly below cash breakeven levels, primarily driven by a sharp alexander.sloane@barclays.com

fall in naphtha costs. However, our monitoring of daily ICIS pricing data suggests this Barclays, UK

improvement is proving short-lived: cracker product prices have continued to weaken

Setu Sharda

through July while naphtha prices have remained broadly stable, implying renewed pressure + 91 (0)22 6175 1934

on cracker margins. Given the elevated volatility in commodity markets, we have also setu.sharda@barclays.com

assessed March–July spreads on an unlagged basis to better reflect underlying margin Barclays, UK

dynamics. The July data points to a clear inflection after the sharp margin expansion seen

between March and June, which was largely driven by temporary supply disruptions

associated with the Iran conflict.

• This is broadly consistent with our BASF investment thesis.