Will the Chemicals Industry See Better Times?

S&PGlobal Ratings WWilltihlelCthhemeicalCsInhdusetrymSeeicalsTimeIsn? November9.2023 dustrySeeBetterTimes? Copyright©2023byS&PGlobal.Allrightsreserved. GlobalMacroNarrativeLResilientServices.StubbornInflatior OURCUR-LNIBASELINE Globa.growthisunovcnbutremainsrasilientaspccial.yforservicos:manufact.uringmixed Tabormarketsremaintignt.eveninregionswhereoutputhasstalled:Fuozone. Tradeisflat.meaningdomesticdriveneconomiesareoutperformingesp.EmergingMarkets) OverallinfleLionisrallirig(goodforhousenolds),bulcoreisstickier(badforcenlralbanks) PolicyratesneedtostayelevateoinDs.constrainingdownwardraterrobilityinrrianyCms -Markctshavofullyboughtthe"higher"butnotyotful.ytha"longor"partofthonarrativo Econcmicresi.iencemeansanyadjustmertcanespreadout->srallower,longerdownturn Bottomline:drawrioutslowdown(note:sarreoveralladjus.rriert)withhigherforlongerrates. Impligation:1olicywilloa.ancegrowt? andmarketdiscipne wenowforecastgrowtibe.ow5%this year.wth.rnitedspi.loverstet'ereslo howorld. Autnoririesresporserasbeen meas.redarctargetecscfar. Strugelingoropertyseosor(lowetiergitiesjanc.nkstotoculgcverrrnerls andconsurcraroholdingownrrowth. IisappointingpostCovll)rebound wthweakcorfidenae. China nolahgh:marketabuyhsview. Imlisezi:Fecwlllikelyneec Labormarke:remairsright,butsJpplyandderiandcomingtooa.anceasguits.openingsconie dow"a'cpurt'ciputionrc.ot.p. Ongoinaboostfromfisoalpolicy dowrwarcleglikelywith affcrdaoilityproblcmi. Ilousingactivityapoearsrorave ClassicOverheatingProblemwitldemandoutstriaoinesuaoly:rronetarypolicyrmissir202*(not riking) Unovo"cxoasiorwitsorvicosdemendresilient.still.3Gl4.9%. mo.ca.ic7:CcBnowfinisredwith rales.ocusonGT nllatioishighort'a'tneL.s..bu. ivenslowergrcwtimomentum,we thinkpricepressurewilease. abormarketsright,ara-irmsare passinghighercos.ebackto Geopoliiealriskstofowtdienslmatoria.zcasfoarcdoutromairsa keyoownsderisk. essoverheatingthantneL..S. srowthhasstalled.Peripheyis BigThreelMacroNarrative (%)20232024202520262023202420252026U.S.Europe 2.3 1.37.41.8 0.5 0,0 -0.1 Ourrevisednumbers(from September-end)onceagainshow Eurozone gr0 0.9 1.5 1.5 0.0 C.D -0.1 -21 Gerrary -0.2 0.6 1.4 1,2 0.0 -0.2 -0.2 France 8°0 0.9 1.5 1, 0.1 -0.1 0.0 0.0 Italy 0.9 D.7 1,2 1,4 -0.2 0.1 -0.1 u.Rds 2:1 1.5 2.2 2.2 0.5 0.3 -0.1 0.0 LLK,Asle-Pacific 0.3 0.5 1,5 16 0.3 -0,3 -0.1 -O1 Ching 4.8 4.4 54.5 -0.4 -0.3 E'0 0.0 uapan 1,8 13,9 0.6 -0.1 a0 0.0 GlobalGrowthISlowdownPushedOut,AutumnIsComing S&PGlobal Latestforecast Changefrompreviousforecast India* 6 6.9 6.8 7 00 C.0 0.0 Otheremergingeconomies Mexicp 3 1.7 2 2. 1.2 0.1 -0.1 *Fiscalyeer,beginningApril1inthereferenceoalerderyear,Sources:S&PGloialMarketIntelligenceandS&PGlobelRatings, highergrowthin2023.butlower growthin2024. Thisreflectsthecoritinued strengthofservicesdemand fueledbystronglabormarkets Bulhigherralesareslarlinglo bite.andaslowdowniscoming Our"softlanding"baselineis predicatedonstronglabor markets Risks:scornoxlslido. Brazil 2.9 1.2 1.8 2 1.2 -0.3 -0.1 SouthAfrica 0.8 17 17 1.7 0.2 0.1 0.0 -0.6 World 3:1 2.8 3.3 3.3 0.2 -0.2 0.0 0.0 Cogyright2023byStandard&Poor’sFina:1cialServicesLLC,Allrightsrescrved. Ratings 5 GlobalMacro/Risks 1. iccc)Resilienlservicesandlabordernand.slickyinllalion. Fedandothercentralbankswillneedtogohigher. Marketswillneedtore-pricethismovetassetslowervolhigher) Raisesriskofhardlandingandmacro-creditstress(incl.frommaturitywalls). Problermaticforborrowers,esp.EMs 2.SlrongerUscoller,highLreasaryra.es. Dollardependentcountries/sectors/entitiesfacehighercosts:potentialstress. Sofar,onlyaflighttohighergualityassetsandmodestde-risking;somevolatility. 3.(newjRealandriniancialspillevers/escalalionfrorrisrae!Gaza(andUkraineongoing) Escalationwouldlikelyhitconfidence,hurtspendinganddamagethemainsupportofcurrent growth. Muchhigherconfidencebandsaroundthissconario. RetallSalesGrowthYoY%3mma m Frane bpn UK. U.5 Irdereels Tuar 23C (FI.. (30) 2C 30 .J.S. urczo" RetailSalesGrowthISlowing,withAFewBrightSpots -Trendirglowerconsisrentwithsofteninggrowth/landing DMsledoySouthernEurope(tourism)andJapan! EMslookrelalivelyfirrri Cniriaslil!orLreno.G2oEM>G20DM. RetailSalesGrowth RetailSalesGrowth .m..F.3str,sengusaue,f.ien.iotthugn/ug.>i/3 Ne:ngSa.k/nboer.e.et:r9monsSompise.nm.ou.ore,srore. Mg20::cn.2323.Sogm:riotoniStnancsBneu,Fefnit.Lctancugh/ug.2023 IndustrialProductlonGrowthYoY%3mma CLEaT Amwtrs Fm Chins 12 Nats Snhtr Tu W2JLW223-F 23 :12 I;;: IndustrialProductionIWeakPartoftheGlobalGrowthStory Belowtrendeverywhere-nogreenortheheatmap ChinaandSouthKoreapart'clarlyweak. KowedgebelweenDMandEMiunlik会relailsales: IndustrialOutputGrowth IndustrialOutput Nonicno!SmtisticaSuracu.nrin,v.Dootmugh.J2323.r._622forAuetola RealPrivateConstructionPutInPlaceinTheU.S. RealPrivateConstructicnPutinPlace 20125,Billiors RealPrivateNonresidentialConstruction RealPrivateResidentialConstruction 850 850 800 800 750 750 700 700 650 650 600- 600 55