High Grade Basic Materials Weekly

Research evidence excerpt

High Grade Basic Materials Weekly

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Week ended July 24, 2026

Industry Overview

HG Basic Materials spreads finished flat wider w-o-w 24 July 2026

HG Basic Materials spreads finished flat w-o-w, performing roughly in-line with the Corp High Grade Credit

Index (+1 bps w-o-w, OAS basis). All subsectors performed roughly in-line outside of North America

Paper & Packaging (-1 bps), which slightly outperformed. In terms of excess returns, HG Basic Materials

Basic Materials (-7 bps of excess returns) outperformed the Corp Index (-14 bps) w-o-w.

All subsectors outperformed, led by Paper & Packaging (+3 bps).

2Q26 Basic Materials earnings: DOW, STLD, and FCX

As Basic 2Q26 earnings kick off, we discuss results from Dow Inc (DOW), Steel

Dynamics (STLD), and Freeport McMoRan (FCX). In Chems, DOW announced a 2Q26 Daniel Lungo Research Analyst

EBITDA beat, while providing 3Q26 adj. EBITDA guidance below consensus. Though BofAS

DOW has materially benefitted from the start of the ME conflict, which has alleviated daniel.e.lungo@bofa.com

some ratings pressure, we still see risk to DOW’s ratings down the line. That said, given GavinResearchAndersenAnalyst

management’s stated intention to prioritize ~$1b of debt pay-down, spreads should BofAS

remain technically tighter in the near term. We consequently affirm our MW rec. In gavin.andersen@bofa.com

Metals, STLD reported an EBITDA beat. We hold an improved outlook on STLD given (i) a PeterResearchMerliniAnalyst

constructive outlook for steel pricing and demand heading into the 2H26, (ii) its BofAS

peter.merlini@bofa.com

improved cash flow outlook, and (iii) commentary downplaying a meaningful steel or

aluminum mill acquisition near-term. Despite improving fundamentals, we see STLD as

fairly priced and remain MW.