Chemicals Chemicals Sector - COVID-19: long-term risks & opportunities for the sector

We see long-term risks from COVID-19 in Chemicals including capex cuts in key end-markets, low energy prices potentially slowing decarbonisation, lower auto demand from changing behaviour, & role of China in petrochemicals.

11 May 2020

This bar chart shows UBS estimates for years 2020-22 of global auto production in Western Europe, North America, China, Brazil, Eastern Europe, and Global.

Initial implications are wide-ranging.

We have already written extensively about the likely impact of the recession and outlined our initial view of what's priced in regarding 2021 recovery. Investors are, however, increasingly focused on the long-term implications of the crisis on the Chemicals industry. We would segment these risks and opportunities into "top-down" (prolonged social distancing, high debt/GDP ratios, threat of increased protectionism, shifts in transport usage) and "bottom-up" (capex cuts in key end-markets, role of China in petrochemicals, de-carbonisation plans and sustainability).

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