Europe chemical firms' share prices on a high but may stall

25 September 2009 15:04  [Source: ICIS news]

By Lucy Craymer

LONDON (ICIS news)--After three months of strong trading, the share prices of most European chemical companies are at elevated levels but could soon stagnate, an analyst said on Friday.

The JP Morgan Cazenove chemicals analyst said in an investor note that company share prices had increased on the back of reported signs of stability.

In the last three months, the Dow Jones Chemical Stoxx index has risen 27% with chemical giant BASF rising the same amount. Rhodia saw the biggest increase in Europe chemical stock prices with shares rising 87%.

The note added that chemical companies' balance sheets supported the suspicion that without more positive news, share prices could stagnate in the short run and were vulnerable to a period of profit taking.

The analyst said Lanxess, Arkema, Yule Catto, BASF and Johnson Matthey were rated to do slightly better than market return.

AkzoNobel, Arkema, Elementis and Lanxess should all benefit in due course when conditions improved and particularly when volume growth returned, it added.

Oil, metal and plastic prices all took a hit on Thursday on the London Metal Exchange due to continued worries about the state of end-user demand weighs on sentiment, said the MF Global daily plastics commentary.

To discuss issues facing the chemical industry visit ICIS connect

By: Lucy Craymer
+44 20 8652 3214

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