Red sea trade disruptions to affect the fertiliser, capital goods sectors the most: Crisil report
Red Sea. Whereas, trade in sectors like metals and textiles are the least affected sectors because of the Red Sea crisis. Also Read: Red Sea crisis: Canada asks Beijing to influence Houthis, 'It's in China's interests' The report pointed out that a sustained disruption in trade routes may lead to extended delays in the delivery of goods, hence impacting players within the capital goods sector.
The trade disruptions can also lead to an undesirable inventory build-up that may exert pressure on the efficiency of companies in the capital goods sector. Delayed deliveries of products can also contribute to a slowdown in order conversions. Also Read: Red Sea Crisis leads shipping rates to spike; Should you Buy, Sell or Hold the shipping stocks? The disruption in trade because of the Red Sea conflict has significantly impacted fertiliser exports to India.
According to the CRISIL report, the key fertiliser muriate of potash (MOP), from Jordan and Israel has been majorly affected. India imports around 10-15% of MOP from Israel, whereas 25-30% of it comes from Jordan. However, the government has assured that it has maintained a sufficient buffer for fertilisers.
Also Read: Red Sea crisis may spike freight cost for corporates by 30%: Report India’s major chunk of crude oil supply comes from Russia (37%), Iraq (21%) and Saudi Arabia (14%). The report says that the crisis has a 'medium' impact on India's crude oil supply. Despite the nominal impact on the oil supply, there has been an increase in freight and insurance costs, highlighted by CRISIL in its report.
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