Chemicals: Tepid end to CY2023

18 Jan 2024 , 11:18 AM

Trade data report sheds light on the trends in the import of bulk chemicals and the realisation of key product exports during Q3FY24. Overall exports for Chemicals under analysts of IIFL Capital Services tracking universe remained weak in Q3FY24 (down 11% QoQ and down 23% YoY). Though exports witnessed MoM rise, it was insufficient to lift the overall export for Q3’24. Realisations for Chemicals and Agrochemicals remained weak and will impact the profitability of companies. Despite moderating marginally in Q3, import volumes of key bulk chemicals continued to pose challenges for domestic import substitution products. However, the recent attacks on ships passing through the Red Sea resulting into sharp rise in transit time, freight and insurance cost — will likely benefit the import substitution products. 

DAP and NPK imports ease: Imports of DAP and NPKs declined 31% and 16% YoY respectively in Q3’24. The decline in NPKs volumes was primarily driven by lower imports from Russia, as India continues to import almost the entire volumes from Russia. DAP import volumes declined ~31% YoY to 1.6 mn MT in Q3’24. India imported ~0.6mn MT of DAP from China during Q3’24, which accounted for ~34% of the total imports as against ~52% in 2Q’24. 

Imports witness moderation: After witnessing surge during 2Q’24, PVC, imports moderated during Q3’24 (down 5% QoQ). TDI imports were down 22% QoQ, while Bromine imports declined 29%. Amm. Nitrate too was down 13%. India became the net importer of caustic soda as imports surged. Despite sequential moderation, imports stay at elevated levels YoY for most of the chemicals. Soda ash imports doubled YoY, with imports from Turkey rising 4.5x YoY. 

Exports rise in Dec’23: Though exports witnessed MoM rise, it was insufficient to lift the overall export for Q3’24. The rise in Dec’23 exports was driven by refrigerants and speciality chemicals. Agrochemicals exports remained weak and declined QoQ. Realisations for both Chemicals and Agrochemicals remained weak and will impact profitability of companies.