Citigroup downgrades Solvay to 'sell' from 'neutral' on weak demand

22 June 2012 17:27  [Source: ICIS news]

LONDON (ICIS)--Citigroup has downgraded Belgian chemicals producer Solvay to “sell” from “neutral", on the back of sluggish demand and weakening prices for some of the company’s key products, the financial services corporation said on Friday.

Citgroup said that demand has slowed for products such as silica, used in tyres, and polyamide, used in the textiles industry. However, it added that demand remains healthy for specialty plastics.

“Some of Solvay’s core products have started to weaken considerably in June: EU PVC [prices are] down 15% month on month, caustic soda down 11%, polyamide down 1%, rare earth prices down around 5%,” Citigroup added.

It said that tightness in the first quarter of 2012, due to maintenance and plant outages, was followed by better product availability and some de-stocking in the second quarter.

“This doesn’t bode well going into a seasonally weaker second half of 2012 as the momentum needed for a recovery is fading away rapidly,” it added.

Citigroup also lowered Solvay’s share price target by €25 ($31), to €75. Solvay's share price closed on 21 June at €74.57. down 5.93% in a weak market.

($1 = €0.80)

By: Leigh Stringer
+44 208 652 3214

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