High Grade Basic Materials Weekly

Research evidence excerpt

High Grade Basic Materials Weekly

Accessible version

Week ended July 17, 2026

Industry Overview

HG Basic Materials spreads finished 1 bp wider w-o-w 17 July 2026

HG Basic Materials spreads finished 1 bp wider w-o-w, performing roughly in-line with High Grade Credit

the Corp Index (+2 bps w-o-w, OAS basis). All subsectors slightly outperformed outside North America

of Metals (+2 bps), which finished in-line. Basic Materials

HG Basic Materials outperformed the Corp Index

HG Basic Materials (-5 bps of excess returns) outperformed the Corp Index (-11 bps) w-

o-w. Outside of Metals (-10 bps), which finished in-line, all subsectors outperformed

including Paper & Packaging (-2 bps), Construction / Building Materials (-2 bps) and

Chemicals (-2 bps).

Daniel Lungo

June data suggests lighter PE inventory build vs expected ResearchBofAS Analyst

In Chemicals, we include our equity team's discussion on The American Chemistry daniel.e.lungo@bofa.com

Council's (ACC) preliminary production and sales data for the month of June. The data Peter Merlini Research Analyst

shows an increase in sales across polymer chains which has helped limit the build in BofAS

domestic inventories. While consolidated balances of polyethylene (PE) increased 2% to peter.merlini@bofa.com

~7.5b lbs, this pickup was more modest than BofA's expectation given better than GavinResearchAndersenAnalyst

expected sales (exports) and lower production. BofA saw risk of a material build in US PE BofAS

gavin.andersen@bofa.com

balances given producers unlikely to reduce operating rates and commentary that

indicated a destock of 2-3 weeks of excess pre-buying in March and April. Instead,

operating rates fell to 91% in June compared to the mid-90% in March and April while

Exhibit 1: WTD Excess Returns (bps)