Chemical Distillate: Re-Escalation Broadly Supporting Chems Performance; 2Q Signs of Stabilization in Refinish

研报英文原文证据摘录

Chemical Distillate: Re-Escalation Broadly Supporting Chems Performance; 2Q Signs of Stabilization in Refinish

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Chemical Distillate

Re-Escalation Broadly Supporting Chems Performance; 2Q Signs of 17 Jul 2026 15:29:34 ET

Stabilization in Refinish

Patrick Cunningham AC

+1-212-816-6684

Alexander Yi

CHEMICAL COMMENTARY

+1-212-816-4220

This week, our coverage performance rose ~3% W/W on average compared to S&P Rachel Lee

500 down ~0.5% W/W driven by commodity and diversified chems (+4% W/W) +1-212-816-4559

and ag chems (+4% W/W). Brent crude has climbed to ~$87/bbl amid renewed

US-Iran tensions, which have led to reduced vessel traffic through the Strait of

Hormuz. CE has been a notable laggard within the group as investors have been

asking about the additional acetic chain capacity in China and potential

inflationary concerns on EM end-markets. According to ICIS, China’s June acetic

acid production increased ~3% M/M to ~1.12mmt with plant operations resuming.

China’s total acetic acid production from January to June reached ~6.74mmt,

representing ~10% Y/Y increase from the same period of last year. We continue to

view current valuation levels of ~7x FY27 EV/EBITDA significantly discount the

company’s pathway to de-leveraging and potential benefit from 2H spreads

normalizing at higher floors. Somewhat surprisingly, specialty chemicals and

paints & coatings performance relatively held in (+2% W/W) as investors appear to

disconnect from the conflict-driven trade.

QTD trends suggest that stabilization in the refinish market continues to gain

traction. We view these datapoints as a useful read-through for broader industry

conditions and believe they should support AXTA's and PPG's assumptions around

improving market dynamics heading into 2Q earnings.