BofA analyst Steve Byrne lowered price targets for eight chemical stocks and cut the rating for Dow Inc (NYSE:DOW) to Under Perform from Neutral and for Chemours Co (NYSE:CC) and Celanese Corp (NYSE:CE) to Neutral from Buy.

The analyst saw the most risk in Huntsman Corp (NYSE:HUN), with much of its revenues tied to U.S. and European construction either directly through foam insulation or oriented strand board adhesive or indirectly through furniture/bedding and coatings ingredients. 

He further cut his outlook for the stock citing sliding U.S. and European Methylene Diphenyl Diisocyanate (MDI) prices, as exports from China continue to exert pressure on Western markets. 

The Dow downgrade reflects elusive demand recovery weighing negatively on prices. U.S. and global polyethylene volumes did not rebound in the petrochemical space as expected. In Europe, demand seems to be going in reverse once again, while China's demand growth is offset by increased capacity.

Celanese faces ongoing pressures from weaker margins in acetic acid and derivatives in markets outside the U.S. Byrne expects Celanese to see added weakness in acetyls. Shares only generating a modest return from current prices led the analyst to downgrade the stock.

The analyst saw Chemours' earnings expectations for 2023 as too ambitious given the ongoing destocking in Titanium dioxide (TiO2) and weaker industrial backdrop in the company's fluoropolymer franchise.

He expects the TiO2 and Advanced Performance Materials (APM) businesses to struggle in 2Q. TiO2 pigments have been meaningfully underperforming base coatings demand since 3Q22, likely for a lapse though not fully materializing. As other companies discussed, the lack of volumes inhibits the pull-through of lower raw material costs. 

The APM business is also likely to struggle with similar economic headwinds.

The analyst notes that Eastman Chemical Co's (NYSE:EMN) destock pressure in durables and construction markets will likely last longer. Propylene margins have also compressed sequentially, dragging on the company's upstream footprint. 

Byrne saw the story for LyondellBasell Industries NV's (NYSE:LYB) two Olefins & Polyolefins (O&P) businesses is similar to that of DOW - an expected volume and price recovery is not only not materializing but reversing.

Tronox Holdings Plc (NYSE:TROX) could see a lower boost to 3Q due to operational headwinds. Specifically, floor waters at the company's mining operations in Australia destroyed vital infrastructure and resulted in sub-optimal operations and fixed cost absorption headwinds.

Price Actions: DOW shares traded lower by 1.68% at $51.01 on the last check Thursday. CC shares traded lower by 1.69% at $33.38 and CE traded lower by 1.69% at $106.69.