Cautious outlook for specialty chemical manufacturers
NEW DELHI : Multiple specialty chemical manufacturers are staring at weak prospects in the near term, led by weak global demand and destocking of inventory. Declining chemical prices and increased competition from China post opening of the Chinese economy are putting pressure on their margins. The only solace for now comes from some decline in raw material prices.
Nevertheless, there are multiple factors that led to a cautious near-term outlook for many companies even as analysts maintain a structurally positive view on the sector looking at long-term prospects. Surya Patra, senior analyst at PhillipCapital Institutional Equity Research in a report, said the Indian specialty chemical industry is all set to face one of the worst quarters in Q1. This is primarily driven by a broad based disruption in global chemical demand caused by visible economic slowdown in the advanced markets of Europe and the US, ongoing inventory rationalisation and enhanced competition from China.
The demand woes in the global arena, especially in developed markets such as Europe and US, is impacting exports of Indian manufacturers even though domestic demand continues to support the downside for volumes. The increased supplies of chemicals from China post easing of covid-related measures has been a key concern for Indian manufacturers. The production in China caught pace while local demand failed to impress, leading to more export of chemicals out of China, especially after the Chinese new year.
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