Crop & Chemical dashboard: December 2023

4 Jan 2024 , 12:48 PM

Globally, the recent attacks on ships passing through the Red Sea is forcing companies to redirect routes via the Cape of Good Hope, South Africa. This is likely to result in sharp rise in transit time, freight and insurance cost, thereby creating further headwinds for exporter. However, increase in freight costs in the past benefited import substitution products. In the domestic markets, post the NBS rate cut, fertiliser companies took price hikes in APS and SSP. Overall Rabi sowing is down by ~2.6% YoY, with pulses declining 7%. Season-to-date rainfall (since 1-Oct-23) is ~5% below normal with reservoir levels remaining below last-year levels. TAN, Caprolactum and Phenol spreads improved MoM on the back of easing raw materials while prices of Soda Ash, Bromine, Ethyl Acetate, TDI and Phthalic Anhydride continued to remain stable. 

Spreads improve on the back of falling RM: 

Spreads of certain chemicals witnessed an uptick due to falling raw material prices. TAN spreads improved 36% MoM to US$131/tn as ammonia declined 14% while 11% decline in Benzene propped up Caprolactum-Benzene spreads by 19% to CNY6,234/tn and Phenol spreads by 14%. For Atul, Para-Cresol and Resorcinol spreads remained stable; while 2,4-D spreads improved sharply. BOPP and BOPET spreads continued to be weak. 

Chemical prices remain stable: 

Over the last month, prices of Soda Ash, Bromine, Ethyl Acetate, TDI and Phthalic Anhydride remained stable while acetic acid, caustic Soda and PVC declined. MRP hikes in Fertiliser: Global Urea declined 8% while key input viz. Ammonia declined 14%. Prices of other key inputs viz. phosphoric acid, Sulphur and Rock Phosphate remained flat MoM. In India, MRPs of complex fertilisers viz NPKs and SSP rose. 

Global Agriculture update: 

Dec’23 witnessed 13% rise in Wheat prices, while corn rose 5%. This was despite USDA increasing production estimates. Brazil corn prices too were up 17% MoM, as China redirected imports from USA to Brazil. Sugar prices declined 19% MoM. Though Bloomberg agri spot index declined ~2% MoM, it remains well above pre-covid. 

Rabi sowing and rainfall update: 

Rabi acreages are currently ~2.6% below last-year levels. Rice sowing is down 13% while pulses sowing is down 7%. Wheat and Coarse cereals are flat. Season-todate rainfall (since 1-Oct-23) is ~5% below normal with reservoir levels remaining below last-year levels. 

Other highlights: 

1) Argentina’s new government devalues peso by more than 50%. 2) SRF commissions HFC-32 and Aluminium foil capacity. 3) Grasim Industries commissions Epoxy resins and formulations with a capacity of 246,000tpa at Vilayat Bharuch Gujarat. 4) Himadri Speicalty chemicals announces capex worth Rs48bn to be spent over the next 5-6 years to manufacture Lithiumion Battery (LiB) components with a capacity of 200,000 tpa 5) Aarti Industries signs a long-term contracts with global agrochem major for a niche agrochemical intermediate worth Rs30bn over 9 years 6) Anupam Rasayan signs long term contract with a Japanese company for a polymer intermediate worth Rs5bn over 9 years. 7) DGTR recommends ADD on Para-Tertiary Butyl Phenol (PTBP) imported from Korea, Singapore and USA for a period of 5 years. 8) There was a leak of ammonia gas from a subsea pipeline of Coromandel Intl in Ennore.