Chemicals Sector Update - Price trend in Nov’21 By ICICI Securities
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Price trend in Nov’21
R-22 prices rose to Rs246 (up 28.0% QoQ) in Q3FY22-TD catching up with inflation in other ref-gases, which will benefit SRF, Navin Fluorine and Gujarat Fluorochemicals (GFL). In the packaging film segment, spread has increased for BOPET but has been lower for BOPP. NTCF import volumes remain elevated probably on higher prices from domestic manufacturers; hence, long-term margins for technical textiles may not sustain at existing levels. Lauryl alcohol prices have slightly dipped in past two quarters and LAB prices declined marginally QoQ, but it has now caught up with LA inflation YoY. Inflation in Rossari Biotech’s four key raw materials will keep company margins under pressure. Pigment prices have increased (good for Sudarshan Chemical), but it is to be seen how much of its raw material inflation is passed on. EPL will continue to face challenges from rising polymer prices. GFL would benefit from rise in PTFE volumes and higher realisations. PCBL has seen higher export volumes for carbon black.
SRF Ltd: R-22 prices hardening; packaging film spread firm
* R-22 prices rose 28.0% QoQ (up 56.9% YoY) to Rs246 in Q3FY22-TD. Fluorspar (acid spar) prices were up 7.1% QoQ / down 3.5% YoY at Rs28. R-22 spread (to fluorspar and chloroform) was Rs145 vs Rs87 in Q2FY22. R-22 prices are up 31.4% MoM to Rs282 in Nov’21. Export volumes have dipped 22% YoY to 2.9kte.
* MDC (methylene chloride) prices dipped 0.1% QoQ / rose 61.8% YoY to Rs53; methanol prices rose sharply while chlorine prices have increased moderately. Our analysis suggests spreads / margins in MDC for SRF should be lower.
* NTCF prices were up 32.7% QoQ, down 7.4% YoY, to Rs132 in Q3FY22-TD. Caprolactam was down 1.2% QoQ / up 95.3% YoY at Rs161. NTCF-caprolactam spreads were at a negative Rs30 vs negative Rs64 in Q2FY22. Notably, NTCF import volumes have grown 35% YoY to 10.9kte.
* BOPET prices grew 9.2% QoQ / 33.0% YoY to Rs148. PTA rose 8.1% QoQ / 74.6% YoY to Rs61, and MEG prices were up 20.4% QoQ / 76.6% YoY at Rs59. BOPETPTA/MEG spreads were up 7.2% QoQ / 7.8% YoY to Rs75 (vs Rs70 in Q2FY22). However, on MoM basis, spreads were down 1.8% to Rs74 in Nov’21.
* BOPP prices were 5.0% QoQ / 30.6% YoY higher at Rs181 while polypropylene (PP) prices were up 13.8% QoQ / 60.6% YoY at Rs110. BOPP-PP price spread was down 6.2% QoQ / up 1.3% YoY at Rs71.
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