We forecast deteriorating fundamentals for the European Chemicals sector in H2 2015 as
1) overearning/margins from cheaper oil are passed to the customer,
2) China demand downturn, and
3) oversupply and competitive pricing accelerates.
We retain our key investment theme for 2015 (link), "buy pricing power/sell commodities", and reiterate our relative preference for AKZO/AKE over BASF/EVK. Additionally, we highlight an emerging theme of divergence in staples markets and we reiterate our preference for CRDA over NZYM.