Over the summer, chemical expectations waned and production data showed low momentum in Europe. General uncertainty and the fall of the oil price may translate into inventory speculation. We assume weaker European demand will continue into 4Q14. However, we still expect US and Asian markets to offer growth. In addition, USD strength is supportive. Given the weaker environment, we cut our earnings estimates across the broad. However, we believe market sentiment is overly negative and the sharp share price declines seem overdone. In a cyclical rally we think BASF would be best placed to benefit. It is a high-quality stock and a bellwether for the industry. Conversely, we believe Lanxess (UW) and Arkema (EW) would be more susceptible if conditions deteriorated further. From a fundamental perspective Evonik, Solvay and DSM are our favourite stocks. We upgrade Solvay and K+S from Equal Weight to Overweight, and Air Liquide from Underweight to Equal Weight.