The realisation of most chemicals and agrochemicals fell steeply over the last year and created significant headwinds for the industry. However, the recent analysis of export realisation trends indicates a degree of stability in prices over the past few months, with some even showing signs of improvement. While agrochemical prices have remained weak, primarily due to destocking, there has been some relief in chemical prices with refrigerant gas prices displaying an uptick, owing to seasonality. Despite rising logistic costs driven by the disruption in Red Sea, there has been no meaningful uptick in bulk chemical prices (import substitution). While the stability in prices raises the hope of potential recovery, insights from global company management suggest a very gradual recovery from 2HCY24 as overcapacity in Europe prevails and recovery in China remains uncertain. Thus, a meaningful recovery may still be a few quarters away.
Weakness prevails in agrochemicals:
Despite the increased activity of farmers in applying agrochemicals post the Chinese New Year, weak prices persist due to sufficient stocks of goods within the channel. However, there is a degree of stability in the prices now as the destocking seem to have abated. Q2CY24 is critical as distributors in North America will commence purchases.
Some respite in chemical prices:
Despite a visible recovery in dyes and pigments, the improvement hasn’t yet translated into meaningfully higher realisations. However, ref gases viz. R134a, has seen an uptick in prices owing to seasonality; while fluoropolymers viz. PFTE, PVDF and PFA remain under pressure. Prices of other chemical viz. sodium nitrite, DASDA, BF3 and MEHQ continue to languish at lower levels.
No impact of Red Sea disruption yet:
The attacks on the ships passing through the Red Sea have forced companies to redirect routes via the cape of Good Hope leading to rise in transit time, freight and insurance costs. This has not yet resulted in meaningful uptick in bulk chemical prices in India. Bromine, soda ash, TDI, and PVC remain suppressed because of soft demand and adequate supplies.
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