FRANKFURT (dpa-AFX) - A sector study by U.S. investment bank Goldman Sachs weighed on chemical stocks on Monday. Analyst Georgina Fraser anticipates a renewed downturn for Europe's chemical industry. The expert made a total of seven rating changes. Among German equities, Fraser turned more pessimistic on Evonik and Symrise, while maintaining a skeptical stance on Lanxess. Conversely, the analyst remains relatively optimistic regarding BASF. Nevertheless, all shares retreated within a broadly weak market.

Until now, Goldman Sachs analyst Fraser had banked on a temporary boom resulting from the Middle East conflict. Favorable price trends and shifts in market share could have masked the underlying weakness in demand. However, Fraser has now become more cautious for two reasons: the current decline in demand has arrived more sharply and swiftly than anticipated. Furthermore, increased export pressure from China and greater flexibility in raw material utilization have 'eroded' much of the perceived market opportunities for European chemical groups.

Fraser's estimates are now characterized by pricing at the expense of sales volumes and diminished prospects for profitability improvements. Within the sector, the ability to manage weaker demand and higher costs is very unevenly distributed. The analyst therefore prefers more defensive stocks with pricing power. Due to cyclical risks, however, she sees few buying opportunities.

She maintained her 'Buy' recommendation for BASF, among others, because her estimates for 2027 operating profit are most significantly above the consensus here. Nevertheless, BASF shares lost 1.8 percent in the Dax at the start of the week. Lanxess slumped by 5.5 percent, trailing the MDax, where Fraser's projections sit furthest below market expectations. Evonik shares lost one percent after the analyst downgraded the stock to 'Neutral'.

The Goldman expert sees the greatest potential for divergence among suppliers to the consumer goods industry, such as flavor manufacturer Symrise. However, Fraser is betting on competitor Givaudan, upgrading the rating from 'Sell' to 'Buy'. She believes the Swiss company's extraordinary growth and margin prospects are being overlooked. In contrast, she downgraded Symrise from 'Buy' to 'Neutral', causing the shares to drop one percent.

Overall, the European chemical sector held up reasonably well on Monday with a 0.7 percent decline, in line with the broader market. Since the beginning of the year, the sector still boasts a gain of nearly nine percent, making it one of the stronger performers of 2026 so far. Chemical stocks are primarily being outperformed by oil majors and commodity stocks, which are benefiting from the sharp rise in prices resulting from the Middle East conflict./niw/tih/stk