Given talk of a looming recession, we looked at price and volume trends in the Chemicals & Specialty Materials industry to see how the sector is holding up.
- The analysis is focused on public North American companies that disclose price and volume data
- Overall, the industry enjoyed a strong fourth quarter with sales, on average, up 8.0% over the prior year's fourth quarter
- However, looking at the underlying data, it is apparent that the strong top line growth was largely driven by pricing actions (up 15.7% on average)
- Volumes, on the other hand, paint a more troubling picture with more declines than increases. There are likely several reasons for the weak volume numbers including:
- Inflation and the attendant inverse correlation between price and demand
- A broader pullback across the economy
- Anecdotal evidence from conversations with industry participants who've told us their customers over ordered earlier in the year to get ahead of potential supply disruptions only to find themselves sitting on excess inventory
- Even within the industry, there are some sub-sectors worse off than others - it does appear that the more upstream/commodity companies suffered worse than others (e.g. TiO2)
- As for the Minerals & Inorganics companies - Albermarle's Lithium business accounted for a significant portion of the segment’s volume growth
Year-over-year organic growth within the chemicals industry
High Yield - Average New Issue Yields
Source: LCD Interactive High Yield Report, Monthly & Quarterly Volume tab
We hope you find this information valuable, and as always, feel free to reach out if you would like to discuss in further detail. To read the full report, download the PDF below.
