Many looking at the space are wondering why the margins of the specialty chem distributors $IMCD $AZE have remained so far resilient even though business has clearly softened. The main reason imo is that it's due to a mix effect.

The product mix of an IMCD or Azelis is roughly 90/10 specialty/commodity chems, compared to say roughly 50/50 for Brenntag $BNR or Univar. The first thing that the specialty distributors lose in a demand downturn is the (semi-)commodity part of the business, which can more easily (and cheaply) be provided by eg Brenntag given better positioning in this commoditized part.

The loss of lower margin business improves the product mix from a margin perspective, and margins remain relatively strong.

So it is NOT due to the ability of the spec chems people to retain better pricing - which is what they want you to believe.

Low(er) demand for some time will pressure prices, though prices on the specialty chemicals might be more sticky (as you can't replace them as rapidly). But that does NOT mean prices won't come down.

This is basically the reason why I'm still on the sidelines, despite my bullishness on the sector. We are imo still at the beginning of the 'correction' phase. Margins will normalize, not to the 2019 levels, but lower then today.