Mat-Chem Notes for the Week Ended January 16, 2022
- WTR-CMI last week. In another down-week for the broader market, our WTR-CMI index of 30 chemicals and materials technology stocks bucked the trend by delivering a 0.3% gain, compared with a (0.3%) loss for the S&P 500 and (0.8%) for the Russell 2000.
- Winners and losers. LAC appreciated 9.4%, the most in our index last week, following a series of upgrades by investment banks and record prices for lithium carbonate and hydroxide. FMC gained 5.4%, driven in part by a more optimistic outlook on the LATAM ag market and a price target increase by Morgan Stanley. Concerns over the impact of the Omicron variant of COVID-19 on the dining and traveling patterns of consumers likely resulted in a (6.0%) decline in ECL. A negative pre-announcement of the Dec-21 quarter highlighting ongoing challenges of cost inflation, supply disruption and labor shortage saw SHW losing (4.6%) for the week.
- Faster growth for carbon black. A recent report forecasts the global carbon black market to grow at a 9% CAGR from 2021 through 2030. Such strong expectations for what is a basic commodity that grows more typically at GDP rates are likely driven by the material’s unique electrical properties, both as a conductor and as an insulator when used as a pigment or an additive in plastics formulation. Thus, Cabot Corp (NYSE; CBT), as the top global manufacturer of carbon black may see stronger growth, and is yet another example of chemicals and materials companies that look to benefit from sustainability trends such as EVs and light weighting.
- Expanding opportunities in EVs. PPG recently announced that it has partnered with Cellforce Group—a joint venture between Porsche and Customcells—to supply cathode-binding systems with formulations that are free from a harmful solvent typically used in such applications. The agreement is another example of the materials industry’s ability to not only benefit from global mega trends, but also enable them.
- Looking at process alternatives. ALB announced that it has signed a joint development agreement (JDA) with 6K—an emerging leader of microwave-controlled plasma technology—to explore novel processes for manufacture of lithium materials.
WTR-CMI last week. In another down-week for the broader market, our WTR-CMI index of 30 chemicals and materials technology stocks bucked the trend by delivering a 0.3% gain, compared with a (0.3%) loss for the S&P 500 and (0.8%) for the Russell 2000.
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