Mat-Chem Notes for the Week Ended July 3, 2022



KEY HIGHLIGHTS
  • WTR-CMI last week. After a dead cat bounce the previous week, last week saw the market resume its sell-off, with the S&P 500 and Russell 2000 each losing 2.2% of their value for the week. Our WTR-CMI index of 30 chemicals and materials technology companies delivered a slightly weaker result (2.5%), dragged down by the volatile lithium sector, as PLL, ALB, LTHM, and LAC all lost 8% to 14% of their value for the week. A stronger aerospace outlook contributed to PKE’s 3.2% appreciation and improved investor sentiment following a proxy fight likely drove AVD’s 2.8% appreciation.
  • Ag-chem players step on bio-based pedal. FMC announced the creation of a new identity for its plant health business, called Biologicals by FMC and announced the acquisition of BioPhero ApS, a Danish pheromone research and production company, to further boost its biologicals portfolio of products for $200 million, with the deal expected to close by the end of 3Q22. Meanwhile, CTVA, BASF, and MS Technologies signed an agreement to bring an industry-first soybean trait stack to market in the US and Canada. As part of the agreement, CTVA and MS Technologies have licensed the Enlist E3 soybean trait to BASF for development with the NRS trait in BASF germplasm.
  • NA lithium production plans expand. Lithium producer Sayona Mining and its partner PLL approved the restart of their spodumene plant in Canada at a cost of C$98 million ($76.19 million). Operations at the North American Lithium (NAL) project located near Val-d’Or, Quebec are expected to commence in 1H23. Meanwhile, ALB announced its intentions to build a processing plant with 100,000 mt of annual capacity in the US, possibly using its mothballed mine in North Carolina as a source of spodumene for the plant to process, possibly as early as 2027.
  • Specialty segments looking to grow. The global protective coatings market is projected to grow at 3.4% CAGR to $16.7 billion by 2030 from $12.2 billion in 2021. While not spectacular, this steady growth should be a positive for SHW, PPG, AXTA, and especially RPM and may help mitigate the continuing doldrums in auto/transportation coatings and softening construction markets. Also, demand for plastics in medical applications is expected to grow at a 7.8% CAGR through 2032, which is a positive for AVNT.
WTR-CMI WEEKLY PERFORMANCE

Source: YCharts; July 1 close

WTR-CMI last week. After a dead cat bounce the previous week, last week saw the market resume its sell-off, with the S&P 500 and Russell 2000 each losing 2.2% of their value for the week. Our WTR-CMI index of 30 chemicals and materials technology companies delivered a slightly weaker result (2.5%), dragged down by the volatile lithium sector, as PLL, ALB, LTHM, and LAC all lost 8% to 14% of their value for the week. A stronger aerospace outlook contributed to PKE’s 3.2% appreciation and improved investor sentiment following a proxy fight likely drove AVD’s 2.8% appreciation.

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