Credit Suisse notes weak demand for chemicals, Johnson Matthey falls

8th Oct 2014 09:29

Shares in UK-listed Johnson Matthey, Croda International and Alent were weighed down on Wednesday by comments by Credit Suisse, which slashed its estimates across the European chemicals sector on the back of poor demand.Ahead of a wave of third-quarter results from the sector, the bank said it has reduced its earnings forecasts by an average 2% on the back a "limited demand recovery" since the summer slowdown in Europe, with the construction and automotive markets still "challenging".Credit Suisse also highlighted demand weakness in Latin America, especially Brazil, as well as moderating growth in Asia.Meanwhile, analysts said that product spreads remain under pressure which limits companies' pricing power. At the same time, there also hasn't been any easing of expansion or spending plans.The bank's rating for chemicals company and precious metals refiner Johnson Matthey was left at 'neutral', while its target price was trimmed from 3,000p to 2,900p.The target price for speciality and oleochemical products manufacturer Croda ('outperform') was cut from 2,500p to 2,350p, while Alent's ('outperform') target was left unchanged at 390p.Johnson Matthey was down 2.5% in morning trade, while Croda and Alent both fell 1.1%.