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Investing.com -- Bank of America warns that in the chemical sector an earnings trough remains out of reach as weak demand and rising inventories weigh on commodity players.
The brokerage downgraded Huntsman to Underperform and cut Albemarle, Nutrien and Westlake Chemical to Neutral, while upgrading RPM to Buy and FMC to Neutral. The brokerage also lowered price objectives across the chemicals sector.
Element Solutions remains its top pick.
BofA said commodity chemicals face both cyclical and structural headwinds, with polyethylene inventories building as exports lag.
It warned that the fourth quarter could mark a tipping point if U.S. operating rates do not decline, raising risks of dividend cuts at Huntsman and LyondellBasell.
In agriculture, farmer profits remain pressured, limiting demand for inputs into 2026. The bank lifted Nutrien to Neutral but kept CF Industries at Underperform, while staying positive on Mosaic.
Specialty chemicals show greater dispersion, BofA said, highlighting growth opportunities at Element Solutions and upgrading RPM on better visibility.