Citi removes BASF from catalyst watch as Asian spreads reverse

Investing.com -- Citi has removed its positive Catalyst Watch on BASF, citing a reversal in Asian chemical spreads in May and weaker-than-expected market share gains in Europe that have dimmed the near-term upside case for the German chemicals giant.

Analyst Sebastian Satz said Asian spreads declined materially last month, reversing gains seen in March and April following the onset of the Middle East conflict. While Europe and the U.S. posted modest increases, Citi said the Asian reversal "does not bode well for the coming months given Asia's leading role."

For BASF specifically, the bank's model now points to approximately €1 billion in net pricing for fiscal year 2026 across the company's two upstream segments, down from €1.5 billion in April.

Citi's new base case of €7.2 billion factors in around €400 million of positive net pricing and is broadly in line with consensus.

However, the bank said BASF's own comments at Citi's recent European Chemicals Conference indicated that "market share gains in Europe have thus far remained more modest than might have been expected, rendering our upside case of close to €9bn for this year much less likely."

Despite removing the Catalyst Watch, Citi said it remains positive on BASF within European diversified chemicals, alongside Arkema and Evonik.

The bank also maintained its constructive view on U.S. polyethylene producers Dow and LyondellBasell, noting that U.S.-based ethylene producers continue to benefit from a high oil-to-gas ratio and an ethane feedstock cost advantage that European peers cannot match.

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