Chemical Sector Update - Chemical, petrochemical prices, Margins and Trends October 2021 By Emkay Global
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Chemical, petrochemical prices, Margins and Trends October 2021
Chemical prices correct as China power disruption event subsides
China’s decision to tighten its duel control policy of energy in mid-Sep’21 led to a sudden surge in coal all prices, capacity closures and rationalisations, which disrupted supplies and increased chemical prices. However, the event was short-lived and Chinese authorities took action to arrest the rise in coal prices, which started retreating from mid-Oct’21. The supply situation from China is likely to start easing from Feb’22-end after the Winter Olympics ended. Although average chemical prices across the board rose MoM in Oct’21, they have started easing since mid-Oct’21, signifying the peaking out. incrementally, prices may stabilise for the short term and start declining in 2022.
* ~44% MoM surge in China Caustic Soda prices (at peak) — Indian prices have also shot up to ~Rs60/kg; beneficial for Grasim, DCM Shriram, Meghmani Finechem, GACL, DCW and all the Caustic Soda players.
* ~29% Mom surge in China Soda Ash prices (at peak) — Indian players, Tata Chemicals and GHCL, have also resorted to prices hikes, which will benefit in current and subsequent quarters.
* ~13-18% MoM rise in PVC-EDC, PVC-VCM spreads — Positive for Chemplast Sanmar, DCM Shriram, DCW
* Incessant price rise in China glyphosate, peaking at CNY ~78,000/ MT, up ~3x YoY
* China cumulative pesticide production during Jan-Sep’21 up ~20% YoY, easing global availability; but elevated pricing supported by high input costs and a favorable demand environment
* ADD recommended for refrigerant gas R-134a from China PR — Positive for SRF
* ADD imposition on Aceto Acetyl derivatives/ Arylides from China PR — Positive for Laxmi Organics
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