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Price trends in Dec’22

1) SRF: R-22 price rose to Rs335/kg (+12.0% QoQ) in Q3FY23, but volumes were down 15.3% YoY to 2.6kte. In packaging films segment, spreads contracted QoQ for both BOPET and BOPP, which has put pressure on SRF’s packaging films margin. 2) Gujarat Fluorochemicals: PTFE price jumped 5.8% QoQ / 24.0% YoY to Rs1,023 while volumes fell 11.4% YoY to 3.1kte. Other fluoropolymer prices dipped 0.8% QoQ, and volumes surged 308% YoY to 1.1kte. 3) Archean Chemical: Bromine price remained flattish QoQ, but volumes dipped 41.0% YoY to 2kte while SOP price dipped 35.7% QoQ. 4) Clean Science: Clean Science’s Q3FY23 margins were likely helped by 0.5% QoQ rise in guaiacol price to Rs384 and 15.9% QoQ decline in phenol price to Rs103. 5) Galaxy Surfactants: Lauryl alcohol price dipped in Q3FY23 to Rs148, down 22.6% QoQ; this should help Galaxy improve its volumes as a result of reducing cost pressures on FMCG companies. 6) Rossari Biotech: Four key raw material prices have started falling, which has aided margin improvement. 7) EPL: Should see some relief in margin pressures due to fall in polymer price (down 9.3% QoQ). 8) Sudarshan Chemical: Pigment prices were down 3.4% QoQ and volumes down 37.3% YoY to 20.2kte. 9) PCBL: Carbon black export price fell 9.7% QoQ to Rs125 and export volumes were down 10.3% YoY.

SRF Ltd: Packaging films spreads declined

* R-22 price jumped 12.0% QoQ (30.2% YoY) to Rs335 in Q3FY23. Fluorspar (acid spar) price inched up 2.1% QoQ / 34.5% YoY to Rs38. R-22 spread (to fluorspar and chloroform) was Rs213 vs Rs177 in Q2FY23. R-22 price rose to Rs341, up 3.5% MoM, in Dec’22. Export volumes dipped 15.3% YoY to 2.6kte. We are incrementally concerned about the rapid decline in R-22 export volumes, which could be structural. The domestic market may have a similar trend (basically, shift to HFC is happening faster than expected).

* MDC (methylene chloride) price fell 24.6% QoQ / 28.4% YoY to Rs41; methanol and chlorine prices have increased. Our analysis suggests spread/margin in MDC for SRF should be lower QoQ. MDC import volumes fell 29.2% YoY to 14.4kte. MDC prices were up 44.8% MoM to Rs55 in Dec’22.

* NTCF price was down 6.3% QoQ / 7.0% YoY to Rs124 in Q3FY23. Caprolactam price dipped 17.7% QoQ / 11.1% YoY to Rs146. NTCF-caprolactam spread was negative at Rs22 vs a negative Rs45 in Q2FY23. Notably, NTCF import volumes shrank 41.8% YoY to 10.8kte, implying weak demand.

* BOPET price was down 15.1% QoQ / 8.0% YoY to Rs138. PTA price declined 15.3% QoQ / rose 11.7% YoY to Rs69, and MEG price was down 7.7% QoQ and 29.9% YoY at Rs40. BOPET-PTA/MEG spread contracted 16.3% QoQ and 16.1% YoY to Rs64 (vs Rs77 in Q2FY23). On MoM basis, spread shrank 2.0% to Rs63 in Dec’22.

* BOPP price dipped 9.4% QoQ / 9.4% YoY to Rs166 while polypropylene (PP) price dipped 6.5% QoQ / 25.4% YoY to Rs81. BOPP-PP spread contracted 12.0% QoQ and expanded 14.0% YoY to Rs85 (vs Rs97 in Q2FY23).

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