Mat-Chem Notes for Week of November 23, 2021



KEY HIGHLIGHTS
  • WTR-CMI last week. Only eight of the 30 stocks in our index managed to deliver positive returns, outperforming the flat returns of the S&P 500. Our WTR-CMI index declined (2.7%), slightly better than the (2.9%) decline in the Russell 2000, as the last of the Sep-Q results were reported and guidance for the remainder of 2021 provided, allowing investors to reassess and rebalance their portfolios.
  • Winners and losers. Lithium stocks were again the major drivers of WTR-CMI’s performance last week, with the price of LAC rising 9.0%, ALB 4.6%, and LTHM 3.4%. Lithium prices and volumes continued to increase, with LAC announcing an acquisition as well. The strong returns from lithium stocks, however, were insufficient to offset double-digit declines in ECVT and CMP. ECVT slid (22.6%) after it announced below-market pricing of a secondary offering. CMP, while delivering a solid Sep-Q, announced a major change in capital allocation and cut its dividend, resulting in a (27.1%) plunge in the stock price.
  • Change in WTR-CMI membership. We are adding Koppers Holdings, Inc. (NYSE: KOP)—a manufacturer of wood products, wood-treatment chemicals, and carbon compounds used in end-markets such as railroads, aluminium, steel, agriculture, utilities, and residential lumber—to our index, replacing the about-to-be-acquired ROG. KOP participates in markets similar to those of HXOH (wood construction and infrastructure) and CCMP (wood preservation), and may benefit from the infrastructure bill.
  • Steel production caught in the Chinese slowdown. S&P Global Platts reported that China’s output of steel declined (4.9%) MoM in October, hitting a low not seen in almost four years. While production curtailment due to energy constraints may be a factor, slowdown in high-rise construction demand and (we suspect) throttled automotive production may be the bigger drags. If this trend continues, it would be a negative for MTX as well as industrial gas suppliers.
  • Once more unto the breach. JANA, an activist shareholder instrumental in driving the separation of VVV from ASH, has increased its holdings of VVV as the latter announced plans to split into consumer and industrial businesses.
WTR-CMI WEEKLY PERFORMANCE

WTR-CMI last week. Only eight of the 30 stocks in our index managed to deliver positive returns, outperforming the flat returns of the S&P 500. Our WTR-CMI index declined (2.7%), slightly better than the (2.9%) decline in the Russell 2000, as the last of the Sep-Q results were reported and guidance for the remainder of 2021 provided, allowing investors to reassess and rebalance their portfolios.

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