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Crop & Chemical Dashboard: A surprise jump in exports

India’s exports of organic and inorganic chemicals jumped 23%/33% mom/yoy in February 2024 for reasons that are not yet apparent—the leading specialty chemical companies do not seem to have experienced a pickup. The demand environment generally remains subdued, with crop prices under pressure and chemical prices also generally soft. We continue to expect sluggish performances in general for another quarter or two.

India’s chemical exports jumped in February 2024 for reasons as yet unclear

India’s exports of organic and inorganic chemicals jumped 23%/33% mom/yoy in February 2024, while imports also picked up 9% mom but fell 12% yoy. The reason for the spike in monthly exports is not yet apparent, as a category-wise breakdown is not yet available. Besides, the softness in imports may indicate weak domestic demand. US chemical production for February 2024 was lower by 1.3%/0.2% mom/yoy, while chemical railcar holdings—a measure of volumes—increased 4.9% yoy on a 13-week moving average basis for the week ending March 9. US data indicates continued softness in pricing, with chemicals producer prices down 4.9% yoy and import prices down 0.2%/18.1% mom/yoy. Commentary from global companies suggests that a demand recovery is not apparent for the near future and, besides, Chinese overcapacity is an overhang.

Agricultural crop price trends

US futures prices of corn and soybeans ticked up 3-5% sequentially amid short covering and some uncertainty regarding weather, but are still lower 17-30% yoy. In general, farm economics have weakened in recent months, and that is a worry for agrochemical demand. In India, vegetable prices are significantly higher yoy, while palm oil prices have also perked up amid weather-related concerns. Rainfall remained deficient across the country in March, and reservoir levels remain low in southern India. Fertilizer prices remain generally weak, although urea has perked up recently in the US. On the agrochemical 9(3) registration front, while there were new registrations obtained by several companies including Sumitomo, Dhanuka, Rallis and Best Agro, the most interesting seems to be pydiflumetofen, a patented fungicide from Syngenta.

Chemical price trends

While chemical prices remain soft in general, a few points worth highlighting include: (1) prices of BOPP film increased 10% mom—potentially a positive sign for SRF’s Packaging Films Business, although raw material polypropylene prices have also risen in recent months; (2) HFC refrigerant prices have perked up in China YTD, as highlighted in our recent note; (3) there may be some pricing pressure on certain contract-manufactured products, e.g., topramezone and DFPA for SRF and Solstice 1233zd for NFIL; (4) Astec has started shipments of pyroxasulfone—a sign of looming competition for PI and its customer Kumiai; and (5) market reports suggest there might be a shortage of nitric acid (a key raw material for Deepak Nitrite and Aarti Industries) amid a plant shutdown by a key producer. Soda ash prices remain under pressure, as do phenol spreads.

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