The global economic slowdown, lockdowns in China, and new capacity additions will continue pressuring the chemical spreads in 2023. Nevertheless, the current valuations have already priced in those factors, we believe. IVL as our preferred pick.
Subdued demand in near-term, recovery expected afterward
The global economic slowdown and ongoing lockdowns in China will tend to exacerbate downward pressure on the chemical demand in 2023. Moreover, the commercial launch of new capacity and sustained high feedstock costs comprise other factors pressuring chemical spreads next year. Given these trends, we expect most chemical margins to sustain relatively stable YoY at low levels (or soften) during the period.