Is the agrochemical industry on the cusp of a turnaround?
Subscribe to enjoy similar stories. Agrochemical companies have had a rough time over the past year or so. But tough times don't last, and the corporate and analyst commentary has adopted a more optimistic tone of late, hinting at early signs of recovery.
Moreover, it looks like inventory destocking, which had been a major overhang, is now mostly behind them. Prashant Biyani, Vice President of Institutional Equity Research at Elara Capital, notes that the global inventory destocking phase is largely over. But while domestic-facing companies are in the clear, exporters face a different challenge: despite the volume recovery, prices are not increasing due to steady supplies from China, he said.
An ICICI Securities report dated 19 June said, “Early signs of a turnaround in agrochemicals, particularly supplies for innovators, are visible now." The report noted that agrochemical inventory levels have dropped below normal, providing some comfort, while underlying demand remains stable. US agrochemical companies are ramping up outsourcing and embracing an asset-light model, opening the door for Indian specialty chemical firms to tap a bigger addressable market, the report added. Also read: Heavy showers could rain on agrochemical firms' parade in Q2 The chemicals and agrochemicals sector struggled in FY24 owing to shrinking export demand, China's aggressive dumping, and persistent pricing pressures.
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