Commodity & Intermediates 3Q Preview; D/G Dow & LYB to Neutral

We downgrade Dow and LYB to Neutral as we no longer have conviction on asymmetric upside for PE prices, even at $100 crude. While we pencil in the consultants' October price increase of 5cpp, we believe demand weakness continues to cap the upside stemming from the higher oil & global feedstock costs. Even with the oil-to-gas spread expansion, 3Q has proven that demand destruction overrules geopolitical feedstock support. We also lower our estimates broadly across EMN and CE, noting the weakness in demand across the commodity and intermediates coverage. Similarly, for WLK we lower estimates with most of our changes stemming from higher energy & diesel costs with additional headwinds from turnarounds. We downgrade both Dow and LYB to Neutral from Buy and lower our PT on Dow to $30 (prior $35) and LYB to $63 (prior $72), based on 7.3x our respective 2027 EBITDA estimates.