Bulk Chemicals and Fertilizer Industry to Bear Rs. 25000 Crore Losses Due to Lockdown: ChemAnalyst

Bulk Chemical and Fertilizer industry in India has come under pressure on declining imports and slacked demand as an outcome of stringent measures like lockdown put up by the government to constrain Coronavirus. Production cut and shutdowns have severely throttled the market sentiments for chemicals in India by leading to a major loss in demand from downstream industries. Moreover, supply chain disruption has also hindered the manufacturing of chemicals as the industries are unable to cater the requirements of production. In addition, fertilizer companies like National Fertilizers Limited in India is prominently grappling the heat of lockdown by continuing the operation in such ground-breaking scenarios. Enough demand from agro-chemical industries has kept the stocks stabilized in bulk and fertilizer market of India. With industries resuming production activities on ease in restriction by government, hovering revenue is anticipated to recover well in the coming months. Till date, Indian bulk and fertilizer manufacturing companies have not announced any layoffs or salary cuts.

Visit more info: https://www.chemanalyst.com/

India imports a significant volume of bulk chemical and fertilizers, pesticides, fungicides and insecticides from China and Middle East, almost 15 percent of urea demand and about 50 per cent of other pesticides etc. Disruption in Chinese production has given a temporary advantage for the Indian producers to cater to the domestic demand. But with prevailing lockdown restrictions, farmers are forced out of employment and the physical movement of goods and commodities across the country has been crippled. This has caused delays in shipments and failure to deliver products to the downstream plants that have recently started to operate. Prices of commodities like sulphuric acid in the Asia Pacific region have rapidly dwindled as huge inventory build-up as freight movement has been restricted. Moreover, those Indian producers that are running their plants do not have the scale or scope of operation in order to be able to take the advantage of lower feedstock costs. On one hand, supply chain cross-overs have become a major concern for the supply side, most of the producers have resumed operation but with dampened demand in the domestic market, are facing fast depleting cash-reserves with recurring operational expenses and diminished revenue generation. Domestic manufacturers such as Tuticorin Alkali Chemicals and Fertilizers Ltd., Zuari Agro Chemicals Ltd., Coromandel International Limited, Mangalore Chemicals and Fertilizers., DCM Shriram Limited have all resumed operations in the country and are likely to operate at 60 to 70 per cent efficiency to let the domestic market absorb the excess inventory. Although inventory of bulk chemicals & fertilizers has been enough for the crops, but it has severely delayed the rabi harvesting season. If the lockdown is extended there might not be enough cushion to protect against thinning profits. Sourcing and procurement of raw materials has been a pertinent issue and extended lockdown will only aggravate the already affected supply chain. Although the Ministry of Home Affairs has relaxed the lockdown norm for agriculture, fertilizers and goods transportation and has allowed them to resume operation from 20th April 2020. The kharif crop sowing season has begun but labour and logistical shortage might affect the overall import of essential agro-chemicals in the first quarter of FY 2021. Shipments of fertilizers such as Diammonium Phosphate (DAP), Ammonia etc. have been booked for May-June deliveries. Domestic market is expected to return to normalcy during Q2 FY2021 when employees can work full-fledgedly and logistics and operations are fully resumed.

News and Deals: https://www.chemanalyst.com/NewsAndDeals/NewsHome

Bulk Chemicals & Fertilizer sector employs about two-third of indirect labour, and they are likely to face the heat of the disrupted market and stringent social-distancing practices. Employment at every level of the supply chain has been under shock. While some manufacturers have resumed operation, but they are trying to de-staff or at least for the time-being do away with the contractual job. Bulk Chemicals & Fertilizers are the next bad-hit sector to Feedstock & Intermediates, in terms of revenue earnings and employment. With no new hiring to be done, the industry is expecting to put up with an overall revenue loss of INR 25000 cr. and a job-cut of 40-50 thousand by number by the end of the financial year.
ChemAnalyst.com is a subscription based Digital Platform covering in depth data & analysis on 175+ chemicals and petrochemicals. It offers granular level real-time pricing data, news and business intelligence in chemicals and petrochemicals to give you a sustained competitive advantage across the industry value-chain.

Source: ChemAnalyst