KRO - 4 Top Chemical Stocks to Buy As Destocking Has Run Its Course | Benzinga
The chemical industry is poised to benefit from an uptick in demand in certain key markets, including consumer durables and building & construction, as the unprecedented customer inventory de-stocking that started in late 2022 and plagued the industry through the first quarter of 2024 is largely complete.
In addition to the expected demand rebound, strategic measures, including operating cost reduction and price hike actions along with declining raw material costs, bode well for the industry. Stocks like DuPont de Nemours, Inc. (NYSE: DD), Axalta Coating Systems Ltd. (NYSE: AXTA), Cabot Corporation (NYSE: CBT) and Kronos Worldwide, Inc. (NYSE: KRO) are good choices for investment as they are expected to benefit from the demand upturn.
The chemical space bore the brunt of the demand slowdown in certain major markets in 2023, which continued through first-quarter 2024. The downturn in the building & construction market and the de-stocking in consumer electronics played spoilsport, leading to demand destruction in these key markets. In North America, uncertainties surrounding the U.S. housing market weighed on building & construction. Notably, the housing market bore the brunt of interest rate hikes last year. The demand slowdown in industrial and consumer durables hurt the volumes of chemical companies.
Lower consumer spending due to inflationary pressures in Europe and a slow recovery in China also impacted demand. Moreover, a slower recovery in economic activities in China following the lifting of the restrictions related to the resurgence in COVID-19 infections hurt chemical demand in that country. The slowdown in Europe, resulting from the war in Ukraine and weaker consumer spending due to high levels of inflation, led to softer demand in that region. The energy and feedstock inflation resulted in reduced industrial production and consumer spending in Europe.
Nevertheless, customer inventory de-stocking has largely ended, leading to low inventory ...