2 Jun 2023 , 10:08 AM
FMC has downgraded its outlook on global Crop Protection market to low single-digit market decline (from low single-digit growth earlier). Outlook for Kharif is in general positive, as Kharif season would see limited impact of El Nino in coming months. For fertilisers, downward revision in NBS rates is likely to impact profitability for the companies (except CHMB) in Q1FY24. While there are several near-term headwinds across chemical value-chain, consensus view is that exports demand is likely to recover in 1-2 quarters. Agrochemical segment is starting to show signs of slowdown on generic products, despite remunerative crop prices.
Excess Agchem inventory hurts prices:
In Exports business, supply glut for post-patent products in global markets (largely from Chinese suppliers) have led to significant price decline. Despite a small Q4 for domestic players, slower absorption of excess channel inventory lowered volume offtake. Domestic businesses of PI, Rallis India and Sumitomo Chemical were muted during the quarter. Best Agrolife and Bharat Rasayan saw sharp decline in revenues.
Chemicals factoring a sharp rebound in H2FY24:
A large number of Chemical companies have executed their capex as per targets set for FY23. This comprises large players such as SRF, ARTO, CHEMPLAS and TTCH. Based on timelines and ramp-up, the sector outlook is inferring to a sharp rebound in H2FY24, which could be at risk in case of prolonged demand uncertainly or delayed recovery.
Emerging trends:
SRF, NFIL and GFL are on track to commission a combined R32 incremental capacity of 30Kt during FY24. NFIL announced 40Ktpa AHF capacity at Dahej of Rs4.5bn. CRIN will invest Rs10bn in Specialty and Industrial Chemicals, along with foraying into CDMO. ANURAS signed LOIs worth ~Rs29bn with global MNCs over last two months. NEOGEN entered into manufacturing license agreement with MU Ionic Solutions Corporation to manufacture electrolytes in India.
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